Congratulations! You have decided to buy a modular home here in New Jersey. Before you make one of the biggest financial decisions you will ever face, however, watch out for these common pitfalls in the home-buying process. Avoiding these common mistakes will help you be a smart home buyer and get the best value for your investment!
Misunderstanding your mortgage- Before you start looking for a home, you must be pre-approved for a loan. Some prospective home buyers get excited and jump the gun, beginning their house hunting with a loan that is just pre-qualified, not pre-approved. Other buyers misunderstand their loan approval amount. Be sure to read all the fine print, understand even the smallest details of your mortgage and be certain you really are approved before looking for your new home.
- Overly high expectations– Naturally you’re excited about buying a home, and want it to look just like the dream home you’ve always pictured in your mind. But if this is your first home purchase, it’s in your better interest to lower your expectations a bit and invest in a “starter home”: one you can easily afford that fits well in your budget. Keeping the bar set high can translate to overspending on more house than you can afford at this point.
- Going with the first loan they get– It’s important to shop around for your home loan. Properly vetting several lenders and mortgage brokers for comparison and contrast on interest rates, loan terms and other factors will get you the best mortgage in the end. Also, it is good not to display ignorance about the home-buying process to a prospective lender, lest they take advantage and charge you more than necessary.
- Excessive worrying– People can sometimes get scared into waiting to buy their first home because of the state of the real estate market, but the most important thing to consider is whether you are in a position to buy. If your finances are in order and your credit is good, don’t let fluctuations in the market scare you off.
- Not checking your credit– You pay your bills on time, you never filed for bankruptcy- it goes without saying you have good credit, right? One of the biggest mistakes a prospective home-buyer can make is failing to check their credit score prior to seeking preapproval for a mortgage. You never know what kind of falsely-reported information or debts from years ago may still be lurking on your credit report. It’s best to get any credit disputes cleared up and expunged from your report before looking for mortgage preapproval.
- Forgetting hidden costs– When you see the for-sale price tag on your dream home, it’s easy to think of that price as the total cost of the house and convince yourself you can easily afford it. Many homebuyers forget to take hidden costs such as closing costs, appraisal fees, homeowners’ insurance premiums, property taxes and even the cost of moving into account. This can leave a new homeowner struggling to make the mortgage once the total cost of the home takes its toll on the budget. Make sure to add in all incidental costs before putting an offer on a house that may be out of your price range.
- Not making a long-term budget– As with the above entry, it is of the utmost importance that a homeowner sees the big picture in terms of cost. It is wise to create a budget for years down the road in order to determine if the house is truly within their means. The rule of thumb is to spend no more than a third of your monthly income on housing, which includes mortgage principal, interest, taxes and insurance (PITI). It is essential to understand the economy of your household and account for all expenses and debts which may arise in the next 15 to 30 years to truly determine if a house is affordable for you.
Modular homes can help you avoid and mitigate a lot of the issues surrounding a home purchase. Learn more about the Coastal Modular Group’s home building process to find out how!