The Top 5 First time Homebuyer Fears

Buying a house can be a scary thing. The money alone is enough to keep people up at night with crippling anxiety. No doubt anyone considering buying a home has heard horror stories of ‘home buys that went wrong.’ Making huge life decisions comes with a lot of stress. With some much that can go wrong, buying a home understandably scares a lot of people. Knowing what the common fears are is key to overcoming them. Here are some of the most common first time home buyer fears and how to conquer them.

 

Not having enough money

It should come as no surprise that one of the biggest fears that plague first time home buyers is not having enough money. According to  a survey from Northwestern Mutual, money is the biggest source of stress for Americans. Currently 78% of all Americans live paycheck to paycheck per CareerBuilder. As most people are well aware, buying a house isn’t cheap. Not only is there the concern of having enough money for a down payment, after that you have to worry about mortgage payments. 

 

Fortunately, there are ways to make home buying more affordable for average Americans. FHA loans exist specifically to assist low income people buy houses. For those concerned that they may not have enough money to cover a down payment, FHA loans only require 3.5% down while traditional loans usually ask for 20%. The average home price in Phoenix, Arizona is 246,400. While a 20% down payment on that would be nearly $50,000, with an FHA loan, that number drops to a much manageable $8,624. Some FHA loans even accept gifted payments. If you’re worried about coming up with the finances, look into getting an FHA loan. 

 

What if I lose my earnest money?

Sometimes we get all the way to the signing on something and realize we don’t want it. In some cases this can jeopardise your ability to get back your earnest payment. Think of earnest money like a deposit on an apartment. Earnest payments are made from the prospective buyer to the seller to represent their good faith interest in their property. To make sure that you don’t lose this payment, make sure to work with a good buyer’s agent. A good, professional agent will make sure to add contingency clauses into your contract with the seller such that in the event you need to withdraw your offer, you do not lose your earnest money. 

 

What if my house has problems?

This is a very common fear people have. No one wants to buy a house and find out it needs a ton of work and all sorts of repairs. The good news is, this is much less likely to happen now then it would have been 40 years ago and there are lots of steps you can take to make sure you don’t end up buying a money pit. 

 

The first thing you should always be sure to do before making any decisions, is to get a home inspection. This doesn’t mean just grabbing a friend and walking through the home yourself. A home inspection requires getting a professional with years of experience and lots of references to walk through the home and go over in detail the condition of the house. A good home inspector will clearly layout any problems or potential problems with electric, plumbing, and HVAC systems. 

 

Other tools to use when buying a home are title searches and C.L.U.E. reports. Title searches make certain that the seller has a free and clear title. This guarantees that they have all rights to sell their home and that there are no liens against the property and no break in the chain of ownership. If any of these things turn out no to be fulfilled, it can open up a pandora’s box of problems for the new buyers. C.L.U.E. reports compile an extensive search of insurance claim history to see if the owner has ever taken out any claims for things such as water or fire damage, mold, asbestos, etc. These are also useful as it gives you a window into how much it costs to insure the house.

 

I don’t even know what I need to apply for a loan

Assembling the paperwork required to apply for a loan is the most demanding part of the application process. Many people begin having anxiety just over all the forms they need to gather before they even fill out a single one. This doesn’t need to be stressful though. Good lenders will provide you a list of everything you need to begin the application process. Things included on that list typically include W-2 from the last 2 years, pay stubs from the last 30 days, and statements for your checking and savings accounts and any other assets you have. Renters history and credit reports are also typically required by lenders among other things. The bottom line is, this process can seem exhaustive, but if you go through a good lender, it will all be spelled out clearly and easy to follow. 

 

How do I find a good agent and lender?

Like with everything, finding the right agent takes time. You never want to rush into something, especially buying a house. Take time to research agents in your area. Read reviews and ask for references. Ask your friends and family who they used. It’s a process, but just take your time to thoroughly research agents and you’ll be fine.

Find a lender is a similar process. Most agents have preferred lenders they like to use but you don’t have to go with them. Typically you want to go with a lender that provides you with a single point of contact. The mistake most people make is picking a lender solely based on the interest rate they currently offer. However, interest rates are determined by a number of different factors largely relating to your credit rating. Spend time talking to lenders. Like with finding a good agent, spent time researching and you’ll be fine.

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