Errors First-Time Homebuyers Make – FHA Information and Views
When it comes to first time home buying, there are some pitfalls and mistakes that it is very important to avoid as you begin the process of planning, saving, and applying for a loan for a new home purchase.
What mistakes do we mean?
There is the usual home loan 101 type advice that you read in every single finance blog ever written – don’t be sloppy with your credit, apply for new loan while trying to apply for a home loan, and do it Don’t seriously start looking for a home without prior approval of the home loan.
But what about some of the less obvious mistakes first-time buyers make? The ones you won’t find on some other online blog or home loan counseling center?
First-time home buyers sometimes overlook critical expenses in the planning and saving phase of a home loan. You may have to pay for a pest inspection or floodplain area assessment, or you may face the need to replace equipment in the home you have bought.
But one of the overlooked issues of owning a home is being part of a community of owners.
Not all first-time buyers can put up with this, but if, for example, you are buying a condo with an FHA mortgage, you will need to join a condo owner’s association to take care of the maintenance and repair of the common areas, replace or repair the roof at some point, etc.
If the home you want to buy is going through the valuation process but repairs or corrections are needed in order for the loan to be approved, it is a financial matter that needs to be resolved between the buyer and seller.
And if corrections are required, a compliance check may also be required, which costs more money.
That is why it is very important to consider such unexpected costs in the savings phase.
Another mistake first time buyers make? Do not anticipate property taxes as an ongoing expense. Property taxes are viewed by those who don’t already own a home as something to deal with at the end of the year.
But if your property taxes were at a hypothetical county tax rate of 2,020% on a $ 250,000 home, what amount you’d have to raise at the end of the year? About $ 5,000.
If you can afford to pay a lump sum of $ 5,000 (hypothetically) at the end of the year, that’s a very good thing.
But for those who need more time to settle that amount, paying monthly installments on these taxes is the smartest thing to do financially and may even (depending on the loan agreement you get with the lender) require as part of your monthly mortgage payment. And that extra sum that you have to pay monthly is something to definitely expect.