Financial Mistakes to Avoid When Buying a Home November 12, 2019
A home purchase is likely one of the largest financial investments you’ll make in your lifetime. It’s important to get this one right. For the best financial outcomes, avoid the following mistakes.
Taking on too much: You think you’ve found your dream home, but it’s outside your housing budget. So, you try to stretch that budget and simply take out a bigger mortgage. This decision can be disastrous. Taking on more debt than you can afford will leave you struggling to pay utilities and zap any other financial goals. A good rule of thumb is to limit the cost of your house payment (including taxes, insurance and any HOA fees) to 25 percent of your take-home pay.
Skipping the preapproval: Getting preapproved will help you with not taking on too much, as it will provide guidelines for what you can realistically afford. It will also give you a financial advantage when negotiating for a home. Sellers prefer to work with buyers that they know can afford their home, so get preapproved before you shop, so you can submit your pre-approval with any offers. Apply online for pre-approval or visit our Online Mortgage Center for more information.
Skimping on the down payment: The more money you pay up front, the less interest you’ll pay over time. If you save at least 20 percent for a down payment, you can also avoid PMI, which is a fee to cover insurance that protects lenders when a buyer has little equity in the home. And don’t forget to include closing costs and moving expenses as you save up for your purchase.
Going it alone: An experienced agent helps you determine a reasonable price for any home you are considering. They also negotiate the best price for the home. Plus, the seller pays the agent’s commission, so you get all the expertise at no cost to you.
Contact a Mortgage Lender at Forward Bank today!