Some people like surprises and other loathe them. One thing is for certain; live long enough and you will encounter your share of surprises. While some of these unforeseen events can be good, there are other times when the surprise can be costly or even painful. Here are some common surprises faced by first time home buyers.
Loan Denied the Day before Closing
Some people find out that they have been approved for a mortgage and they go crazy, financially speaking. They buy some new furniture, trade in their old beater for a new SUV or just simply forget to make a credit card payment.
- HOW TO AVOID THE SURPRISE: Do not borrow any money while waiting for the mortgage to close, and keep making all payments on time.
No Money Down Does not Mean “No Money”
While the FHA, VA and USDA programs are great vehicles for helping first time home buyers purchase a home without a large down payment, they do not necessarily mean zero money out of pocket for the buyer. At a minimum, the buyer will need to pay some earnest money just to make the purchase contract valid. And occasionally the closing costs are more than the ESTIMATE and need to be paid by the buyer.
- HOW TO AVOID THE SURPRISE –save up $2,000 to $3,000 before applying for a home loan.
Furniture, New Paint, New Carpet and An Electrician Are not Part of the Purchase Price
Many people looking to buy their first home often have big plans for their first home. They want new paint, new carpet, new furniture and all of the other bells and whistles that come with owning a home. However, these things cost money. Even for someone that has rented a nice apartment for several years and has it completely furnished will likely want one or two new pieces for their new home. And even if they have everything they want, sooner or later the lights may have a problem, a pipe bursts or some other issue needs attention.
- HOW TO AVOID THE SURPRISE – On top of the previous item that mentioned $2,000 to $3,000, you should set aside another $2,000 or so for improvements and small repairs.
Spending 6 figures On a Purchase ON YOUR OWN
This has been said before, but let’s all say it again; buying a home will likely be the biggest expense most people make. Therefore it makes a lot of sense to entrust this transaction to a competent mortgage lender and a seasoned real estate agent. They can both help in numerous ways.