No Down Payment Mistakes To Avoid

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Real Estate

Buying a home with no down payment can seem a bit misleading to first time home buyers. While it is a great way to save money, it does not necessarily mean that acquiring your first home will be without any out of pocket costs. Here are some common no down payment mistakes made by people when they buy a home with little or no money down.

Forgetting About Moving Expenses
The most obvious expense involved in getting a new home is moving costs. This can vary from simply renting a moving van and doing all of the heavy lifting yourself all the way to hiring a professional moving company to do all the work for you. If you do the work yourself you may have to buy some moving boxes along with packing tape and packing paper.

If you are planning to ask your friends and relatives for some free labor, they may not expect any payment in the form of cash, but you will need to feed them and provide water and soft drinks during the day of the move.

Also, while on the subject of food, you will likely eat some extra fast food during the move since all of your stuff will be boxed up. And when you are finally ready to leave the old place you may want to clean it real good right before you leave. Your cleaning supplies are likely boxed up, so you may have to make a quick run to the nearest store to get paper towels, scrubbing brush and your favorite cleaning liquid.

Moving Checklist INFOGRAPHIC: 10 Steps to a SHOCKINGLY SIMPLE Move!

Failure to Account for Closing Costs

No Down Payment Mistakes To Avoid When Buying A House
Most people do not realize that approximately 10 to 15 different organizations will get paid from your mortgage closing when you buy your first home. Here is a sample list of the organizations and the closing costs they expect to receive:

Real Estate Agent – commission on selling the home
Closing Attorney – fee for overseeing the loan closing
County Courthouse – fee for recording the deed of the home
Home Insurance Agent of your choosing – first year’s worth of home insurance
Appraiser – fee for providing value of the home
Title Insurance Attorney – fee for researching the title to your new home
Mortgage Lender – fee for providing the mortgage
All of these items are typical of most mortgages. Each entity will get paid from the proceeds of your mortgage.

While it is possible to negotiate with the seller to pay the closing costs, this does not always happen. It is important that you speak to your mortgage lender and get a firm idea of the necessary amount you may be required to pay in the form of closing costs in order to complete the mortgage transaction.

Buying a Home Without a Home Inspection
If you or your immediate family members are not home inspectors, it is a real good idea to pay for a professional to inspect your possible new home. The inspector will provide you with a detailed report that can confirm you should buy the home or warn you of issues.

Unless you are purchasing a brand new home, it is likely that the inspector will find at least one or two issues with the home. It could be a few simple things like a loose wire in one electrical outlet or a small crack in a window. Or the inspection could reveal that the home has damage to the foundation or mold infestation.

If the inspection reveals some problems that can be fixed but require a bit of money, you have a choice to make. Either walk away from the deal or negotiate with the seller. The seller can either lower the cost of the home or pay for the repairs out of their pocket.

Without the home inspection, you would be left to your own devices to find out about these issues and then pay for them after you bought the home.

Buying a Home Without Using a Real Estate Agent
If you have never bought a home before, it is in your best interest to use a real estate agent.

It is possible to find a good deal on a home without the use of a real estate agent. It is also possible to re-roof your house by yourself, replace the transmission in your vehicle all alone and redesign the hard drive of a computer after reading a “how to” guide online. However, why would you take the risk of undertaking these complicated tasks when there are experts readily available? A real estate agent has access to the homes listed for sale in your area, knows the local real estate market and can make recommendations based on hard facts, not the opinion of the mailman or beauty salon owner.


Avoid These No Down Payment Mistakes
A professional agent can also help you in 2 important ways.

First, they can help you find the home you want based on your parameters. Based on location, number of bedrooms, presence of a fireplace, and a host of other variables, the real estate agent can peruse through all of the available properties in your area and single out the properties that fit your needs.

Secondly, after finding the house that is right for you, the agent can provide you with a comparative price analysis. This is a report that shows your prospective home against other similar homes in the area based on price. This is a real good tool to let you know if your intended home is overpriced or a bargain.

These two services can not only save you a lot of time but also help you to pay a fair price for your home.

Ignoring the True Cost of Home Ownership
Individuals that have rented for a significant length of time are accustomed to paying the monthly rent and asking the landowner to take care of any repairs or maintenance items. This is not the case with buying a home. You will be solely responsible for taking care of everything at your new place. Here are just a few expenses that you could incur as there is a true cost of home ownership:

Regular maintenance to the Heating & Air Conditioning system
Water heater stops working and needs to be replaced
Monthly plumbing maintenance to keep the lines clear
A small leak in the roof that needs to be repaired
You will likely want to make fresh changes over time such as repainting the walls, adding new carpet or changing the drapes. All of these things are a normal part of owning a home and you should budget for these things just like you would any other expense item.

Summing Up No Down Payment Mistakes To Avoid
When buying your next home with no down payment, just keep this one fact in mind. A no down payment mortgage can save you a lot of money, but it does not mean you can purchase a home without paying something out of your own pocket. Don’t let no down payment mistakes derail your home purchase.


This article on what is a VA loan was written by Luke Skar of Inlanta Mortgage – Madison which serves Wisconsin, Illinois, Minnesota and Florida. Since 1993 Inlanta Mortgage has provided award winning customer service to clients who need to purchase a home or refinance an existing mortgage.

Luke serves as the Social Media Strategist for Inlanta Mortgage. His role is to provide original content for all of their social media profiles as well as generating new leads from his website, NMLS ID #1016