Buying a home is definitely a dream come true for everyone. Investing in a property is not a decision you take overnight and not something you could take alone. You need to discuss it with your family and loved ones, consider your future plans, and understand your financial position. Even after you do all this, many factors come into play when you are on the path of finding your dream home. While a few of these factors help you move closer towards owning a property, a few might leave you second-guessing. These challenges or roadblocks make you wonder if you wish to be a homeowner.
Most industry experts believe that homeowners in general and first-time homeowners in particular never tend to have a smooth sail when it comes to buying a property. So, are there any major problems that you might have to watch out for? Will preparing for them before you start your househunting give you leverage? Well, you have to read on to find out!
Understanding the mortgage
There is no denying that most of us buy our first homes by going for a mortgage. When we do that, a lot of new terminologies, clauses, and charges come into the picture. And in most cases, we are unaware of what these could mean, which would confuse and scare us out of the decision. However, if you put in some effort to understand how the mortgage works, the duration of the loan, the interest rate, the possibility of down payment, and so on, you could land a better deal.
Getting a mortgage involves a lot of effort, paperwork, and research. And all these are not negotiable even if you own a hundred homes. You might have to do the same amount of research as a first-time homeowner to know the various changes, clauses, and interest rates in the market. Besides that, you might also have to understand the EMI that comes with the mortgage, the interest rate, and the closing charges you might have to pay for while getting the loan application approved.
All these numbers might be overwhelming. And one wrong calculation could put your whole financial situation in jeopardy. Don’t worry! You could get a clear picture of this with the help of a free mortgage calculator. It would solve your problems by giving you a glimpse into your loan eligibility, maximum borrowing amount, interest rate, monthly EMI, etc. Knowing this would help you understand that you have enough money for your livelihood even after paying the mortgage.
Compare various loans
Unlike the common belief that banks are your go-to place for a home loan, there are numerous options. You could apply for a government-issued loan through the Federal Housing Department, the Department of Veteran Affairs, or the U.S. Department of Agriculture. Besides that, you could also try other alternatives like peer-to-peer lending, seller financing, real estate investor, or conventional loans.
You could also try sourcing loans from private lenders and financial institutions rather than just sticking to the banks. This way, you would have numerous quotes from lenders and compare which one suits your needs the best. It would help if you aimed to pick a loan that has a low interest and repayment rate, reasonable closing charges, and no hidden clauses.
Finding the right realtor
When on a house hunt, most people think that finding your dream home in a location of your choice will be the toughest nut to crack. However, homebuyers would agree that their biggest problem was not finding the dream home. It was all about finding the right realtor—someone who has the license, experience, and knowledge. Finding the right realtor does half the magic to buying your home in a drama-free way. An experienced and professional real estate agent would act as your representative while trying to find you your dream home and ensure that you land the best property there is within your budget. They would do the negotiations on your behalf and also help you land a mortgage through their contacts.
The references of escrow, inspection, and mortgage providers from your realtor could give you the best deal and operate with prioritizing your best interest due to the personal recommendation. This would not just reduce your stress but would also help you save a fortune. And that money could come in handy while you are making a downpayment for the home! Remember, the higher your down payment, the lower your interest rate and the monthly EMI.
Finding the perfect location
There are regions in your state or city where you might want to buy a house. Your dream home is close to your office, your child’s school or college, and there’s a nice hospital in the neighborhood. However, it might not seem as easy to do it as you wish it would be. There might not be a home for sale in the location that you want, and if you do, the price could be outside your budget, or the property is just not up to your taste. And the list and struggles go on. Most homebuyers would agree that the hunt to find their dream home has been nothing short of a nightmare, to say the least.
However, you could avoid this by being a little more flexible with your location choices and widening your horizon beyond the school and office’s neighborhood. Instead, you could try to look for homes around the major landmarks in the town or a well-connected location. That way, you could have a life outside work without having to indulge in a strenuous commute. Remember that you will have to make a few compromises while on your journey to buying your dream home, and that’s inevitable. However, when you list out the pros and cons of every property that you have considered, you would be able to make an objective decision, which would not seem like much of a compromise.
Bad credit score
The credit score is something most of us wouldn’t worry about or give a thought until the need to apply for a loan arises. A bad credit score spells doom to every aspect of your life. Leave alone getting a home loan. It could be difficult for you even to source a decent place to rent. So, first and foremost, you need to work on fixing your credit score before applying for a loan. You could start this by getting into a routine of repaying debts, bills, and overdue on time. While it might make sense to destroy your credit cards in an attempt to cut down on your spendings, do not do that. That would do more harm than good to your credit report.
So, consciously cut down on your expenses and schedule your bill payments to avoid missing the due dates. You could also hire the services of a professional credit repair agency to help you with the process of improving your credit score. A credit repair agency could also help you consolidate your debts into a low-interest debt, which reduces the burden of repayment significantly and thereby helps your credit score. When you have a good credit score, you will find it easy to get loans from reliable lenders, banks, and other financial institutions. Besides that, the interest rate would be significantly low too. This is a huge deal considering that you would take a few years to repay your home loan and save a fortune if you land yourself a low interest rate.
Time
There might be times when you have the best deal available for your dream home. Everything from the location to the price is perfect, and you cannot ask for more. However, there could be a small hindrance that pops up in the process and becomes the roadblock in the process of you buying your dream home. If you are wondering what it could be, let us tell you! It is the delay in your mortgage application. Most of the time, there is a delay in the way documents are processed, and the paperwork is done. When there is a delay in the paperwork, it adds to your stress and risks you losing the deal.
A lot of homeowners are victims of this and have lost the best deal and dream homes. So, is there no way to avoid it unless you are self-financing the home? Well, the answer is no! If you have a good credit score, you could get yourself a pre-approval for the loan. That way, you have the money on hand even before you have started looking for properties and hence would have the edge over other buyers. The seller and the real estate agent would see you as a serious buyer who has a lender and the money ready to finance the house. Doing this will ensure that you are not battling with the challenge of time while owning your dream home!
The litigations
Did you know that your real estate agent could be taking you for a ride by promising you the stars and the moons? Well, like any other salesperson, a real estate agent works on a commission too, which means that they are eager to sell you a home. And in that process, they could hook you up with a property that is not an exact match of your requirements, has legal issues, or even improper property documents. So, always make sure you get a copy of the papers and have them verified with the local authorities and a lawyer.
Spend a few days just verifying the certifications, claims, and promises made to you by the seller and the real estate agent. While this could be tiring, remember it would be worth it all in the long run. It will also help if you spend some time in the neighborhood where you have decided to buy the property and understand the community better. It would ensure that you are not in for any surprises after you move in. Besides that, it would also help you settle into the new home sooner if you understand the community better. It would take away a lot of stress associated with buying a new home and moving in. So, do not hesitate and just go for it. Most neighbors are very helpful and accommodative when helping prospective buyers get the hang of their community.
Missing the fine print
The paperwork running from pillar to post is all exhaustive. Understandably, you just want to sign the papers and be done with it. After all, you have been through the terms and conditions multiple times, checked the authenticity of the seller, the home, and the realtor, so what could go wrong? Well, we cannot argue with that point. However, we can say that there is no harm in giving the documents one final read to be sure that you have all the facts in place.
See if everything about the payment terms and amount are the same, and you are signing up for exactly what was promised. So, read through the fine print with great attention before signing on the dotted line. Do not let the excitement of your dream home cloud your sense of judgment. After all, you want your time in this new abode to be all about happy memories. So, let’s start it right!
In conclusion
We understand that all this seems scary and intimidating. You might even consider dropping the whole idea of buying a home. But don’t worry. Being a homeowner is not something you could often do. For most people, it is a once-in-a-lifetime event. So, spend as much time as you can on the research, read through every tiny detail, and spend all your resources and energy on making an informed decision.
Ensure that you leave no stone unturned when it comes to searching, planning, researching, and networking. Talk to your peers, the neighbors in the community, family members, and legal professionals to have your doubts cleared. All this will help you develop a better picture of what is in store, and you would be well-equipped to deal with the challenges. And remember, the points we spoke about here are just some of the many challenges that you might face while trying to buy your first home. However, do not let that deter you. Have your vision set on being a homeowner and let the ends cheer you through the tough trail.
