Buying a home is one of the biggest financial decisions you’ll make in your life — and one of the largest sources of stress for many first-time buyers is the financing process. Unless you’ve done a ton of research, getting a mortgage can feel confusing or even a bit overwhelming. The good news is you can have a smoother and less stressful experience by avoiding these common mistakes:
Before submitting a purchase offer, request the energy bills from the past 12 months to get an idea of the average monthly cost, suggests Marianne Cusato, an award-winning designer based in Miami, Fla., and co-author of "The Just Right Home." Most utility companies can provide a homeowner copies upon request. “If you are in love with a house and everything else works but the energy bills, have an audit preformed to assess what your options are for making it more energy efficient,” says Cusato. “In many cities the electric company will come out and do the assessment for free.”
You most likely deposited earnest money when you signed the purchase agreement, which is a deposit made to a seller indicating the buyer's good faith, seriousness and genuine interest in the property transaction. If the buyer backs out, the earnest money goes to the seller as compensation. If the seller backs out, the money is returned to the buyer.
Closing is a formal process where all parties sign the necessary paperwork to complete the transaction and transfer the property’s title from the seller to you. The seller receives payment for the home, and you receive the house keys! From the amount credited to the seller, the title representative subtracts the funds to pay off the existing mortgage and other transaction costs. Deeds, loan papers and other documents are prepared, signed, and ultimately filed with local property record office.
In addition to saving for a down payment, you’ll need to budget for the money required to close your mortgage, which can be significant. Closing costs generally run between 2% and 5% of your loan amount. You can shop around and compare prices for certain closing expenses, such as homeowners insurance, home inspections and title searches. You can also defray costs by asking the seller to pay for a portion of your closing costs or negotiating your real estate agent's commission. Calculate your expected closing costs to help you set your budget.
Many home shoppers use a lender who was recommended by a friend, family member or real estate agent, and they don’t bother shopping around. But that doesn’t guarantee you’ll get the best rate, or even get a lender who is experienced with loans for your particular situation. The CFPB recommends talking to at least three lenders to get the best loan for you.
Gannon Forrester, an associate broker with Warburg Realty in New York City, says adjusting to the price of properties is the biggest challenge for first-time homebuyers in a pricey market like Manhattan – especially for those who haven’t lived in the area for long: “For someone [coming in] from outside New York, it’s a big culture shock of what the sticker price is.”
Closing is a formal process where all parties sign the necessary paperwork to complete the transaction and transfer the property’s title from the seller to you. The seller receives payment for the home, and you receive the house keys! From the amount credited to the seller, the title representative subtracts the funds to pay off the existing mortgage and other transaction costs. Deeds, loan papers and other documents are prepared, signed, and ultimately filed with local property record office.
The type of home that a person prefers is another factor to take into consideration when determining where to live. Things to consider include buying a new home versus a resale home. Home types include single-family detached homes, semi-detached homes, duplex homes, town houses, or even condos. When determining what type of home is the best fit, a person should take into consideration the lifestyle that he or she lives, current needs - such as rooms - and future needs of the family if it should grow.
Interest rates are the term used to describe the percentage you'll pay your lender to borrow the money you'll need to buy your home. By and large, your mortgage will be paid off either at a 15-year or 30-year timetable. As far as interest rates go, the shorter the time you'll need to pay off the mortgage, the more favorable your interest rate. The lower your interest rate, the less your monthly mortgage payment will be. Consequently, job one when you go shopping for a mortgage lender is to compare interest rates -- and choose the loan where those rates are the lowest you can find.
Closing costs and prepaids: Alex Clark, a real estate Endorsed Local Provider whose team closes an average of 100 homes a year in Portland, Oregon, advises his clients to save around 3% of a home’s purchase price for closing costs and prepaids. But that percentage can vary depending on how expensive fees and taxes are in your area. Closing costs are the fees charged by title companies and lenders involved in your real estate transaction. Prepaids cover any prorated property taxes and insurance items.

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