We are back again with the obtaining a mortgage series! Hopefully by now most of you guys have a better understanding of your financial situation and your chances of getting approved for your first mortgage. If you are pretty confident that your mortgage application will get approved, then congrats! Today I wanted to look at how-to not lose your pants with your first mortgage:
Don’t treat it as your best investment.
Sure home prices can appreciate, but do they always? A home can be a solid investment, but is it always a great investment? These are thoughts that you need to seriously consider as you plan on getting together a down-payment for your first home purchase. In the long run, you have the potential to sell your home at profit. However, you need to factor in inflation rates, real estate fees, property taxes, and the general maintenance on your home while you live in it. Long story short– you shouldn’t expect to make a killing from your primary residence.
On that note, by not treating your primary residence as a major investment you can prevent some poor short-sighted decisions from happening. You don’t want to make any snap decisions when you find out the value of your home has decreased. This could very well happen at one point in your life. Real estate prices always fluctuate. The worst thing that you could do at this point is to panic and try to sell your property. This is a short sighted solution and it’s a guaranteed way to lose money. You’re smart enough to research this topic so don’t make any rookie mistakes.
Stop listening to supposed experts.
Just because a real estate “expert” says that now is the ideal time to purchase a home due to low interest rates or low housing prices, it doesn’t mean that it’s the best time for you. As you read through this series and consult a real estate agent/mortgage broker, you should NOT let anyone else be the main judge of your decision. This is the biggest decision of your life. More importantly, it’s YOUR decision. An expert might think that a certain decision is the best one, but don’t let them decide everything for you.
Don’t rush to buy your first home.
Just because you’ve been approved for a mortgage it doesn’t mean that you have to purchase a home immediately. We all tend to rush with our purchases. I personally feel that I rushed my first home purchase. I felt that I had a great deal and that I had to make a quick decision at the time. Not sure why I felt this way. I don’t regret the condo purchase because I don’t believe in living life with regrets. However, I do wish that I didn’t rush.
Rushing to purchase your first home could cause many financial and mental problems. You could lose money by paying too much for a property or by over-bidding. You can create mental problems by realizing that you don’t like the property as much as you thought you did. It’s really easy to fall in love with a property. It’s even easier to buy a home that you feel attached to. It’s not so easy to sell a home, buy a new one that you end up loving more, and to have to move all over again. This is why it’s important to check out as many homes in a few different areas before you make a final decision.
Don’t use the full limit just because.
When you get approved for a mortgage of X amount it doesn’t mean that you have to buy a property that will use this full limit. Being approved for a mortgage of up to $200,000 doesn’t mean that you need to find a home right at this price. It’s usually recommended to go a little lower so that you have some breathing space. You want to have some money set for the other expenses that will come along with your home.
Spending all of your money on the home.
When buying your first home it’s common to spend all of your money on it. This can cause many problems because this means that you either don’t have an emergency fund or any buffer in case you need money down the line. You never want to leave yourself compeltely vulnerable like this. Putting every single penny towards your mortgage is a guaranteed way to lose your pants down the road in the future.
Congrats on making it this far! You’re now ready to get your first mortgage for your first home purchase without losing your pants.
The rest of the obtaining a mortgage series:
Part 1: Are you ready to purchase a home?
Part 2: Get your documents together.
Part 3: Get ready for all of the fees.
(photo credit: piscesblue81)
