Buying a new home can be incredibly exciting. It’s a sign that you’ve finally made it, that you’re living the American Dream. However, it can also be a daunting, confusing process and if you’re new to it, there’s a significant chance that you’ll fall prey to one of these common mistakes made by first time home buyers. What are they, and what should you do to avoid them?
Not Working with a Long Island Mortgage Broker
There’s a sense with many first time home buyers that they don’t need to worry about securing a loan until they’ve found a property. On the surface, that seems to make sense, but does it, really? No, it really doesn’t. The reason for that is simple – if you don’t work with a Long Island mortgage broker at the start of the process, you have no idea how much you’ll qualify to borrow, or if you’ll qualify at all. Sure, you might have a good idea of your credit score, but what about your down payment? What about interest rates? What about the maximum amount you can borrow? Working with a Long Island mortgage broker early on gives you firm financial footing, and allows you to shop with confidence.
Renting Might Be Better
Yes, there’s a sentiment out there that you really need to own your home. It’s an important asset, right? It’s almost a rite of passage. For generations, home ownership has been sought after. However, it might not be the right case for you. In fact, there are plenty of people for whom owning a home would be a bad idea. For instance, if you’re not going to stay in the area for a long, long time, then why bother buying? If you’re single now and have no plans to start a family anytime soon, why buy? If you’re not prepared for all the responsibilities that owning a home brings to your life (mowing the lawn, paying taxes, repainting and repairing things, paying for homeowner’s insurance, etc.), then why buy a home?
You’re Saddled with Debt
A lot of focus is given to ensuring that your credit is in great shape before looking for a home, and that’s a good thing. However, you can have good credit and still be turned down for a mortgage. You need to understand that lenders do more than look at your history for blemishes and check your credit score. They’re also looking at your debt to income ratio – the amount of money you have going out every month for debt as opposed to the amount of money you have coming in every month. If your debt to income ratio is too skewed, it really doesn’t matter how good your credit score is. The lender will feel that you will be unable to meet all of your financial obligations and still be able to put food on the table and keep the lights on. That makes you a risky proposition.
Not Checking Market Trends
When you’re ready to buy a home, you should go out and do it. Right? Well, not so much. Buying a home is like any other financial decision in some ways, but it’s more similar to making an investment than it is, say, buying a new pair of jeans. It’s crucial that you have an idea of what your local real estate market trends are, and where they’re expected to head. This is absolutely crucial, as it can lead to you paying tens of thousands of dollars more than you should, while owning property that isn’t worth the price you’re paying. It’s also important to know whether it’s a buyers’ market or a sellers’ market, as this will determine your cost of entry, the amount of inventory (homes for sale) and a great deal more. The lower the inventory (supply) the higher the prices will rise. Conversely, if demand is low, prices will drop. Shop smart and track market movements so you can get in when the time is right.
Of all these mistakes, perhaps the single most important one to avoid is not working with a Long Island mortgage broker. You simply cannot leave this to chance, or to the whims of the market. You can’t play Russian roulette and just apply with lenders randomly. That is definitely not a good way to get the right loan for your needs, but it is a great way to end up saddled with high interest rates (or to be turned down completely). If you’re ready to buy a home, get in touch with us at Reliant Home Funding to discuss your future.
Gregory A. Topal
Gregory is Co-Founder and Licensed Loan Originator at Reliant Home Funding, Inc., a Long Island based Mortgage Company. Gregory currently holds a Mortgage Loan Originator License in NY, NJ, CT, CO, FL and PA and plays an active role in running the company. (NMLS #: 38684)
Gregory was raised in Long Island, NY and attended SUNY Oneonta receiving a Business and Marketing degree in 2004. Shortly after graduating he started a career in Real Estate and has been fortunate enough to advance his career throughout the years. He believes his success can be attributed to consistently striving to exceed the expectations of his clients and colleagues.