10 Common Mistakes That Cost First-Time Homebuyers and How to Avoid Them
Buying your first home can be an exhilarating process. It can also be overwhelming. From finding a home that meets your list of must-haves to knowing how much you can afford, there are many factors that can leave you less excited and more stressed.
Nobody wants to have regrets over the biggest purchase they’ve ever made in their lives. If you’re a first-time homebuyer, here are 10 common mistakes first-time buyers make and how to avoid them:
Skipping the Pre-Approval — If you’re serious about buying a home then the first step is getting pre-approved by a lender. Making an offer on a home without pre-approval is only setting yourself up for disappointment. If it remains a seller’s market, most sellers won’t seriously consider an offer that doesn’t come with a pre-approval letter stating the buyer has a lender’s approval to purchase the home. Keep in mind that pre-approval is different than prequalification. Getting prequalified gives you an idea of how much you can afford, while pre-approval takes an in-depth look at your credit report and ability to purchase a home.
Not Working with an Agent —Despite the convenience of browsing for your home online, a real estate agent still plays a key role in the homebuying process. If you find a home you like, have your agent vet the home and run comps so you’ll know if it’s priced right. A good agent may also be able to find properties that fit your list of wants and needs that have yet to hit the market.
Looking at Homes You Can’t Afford — Hopefully, you followed our advice to get pre-approved before you seriously begin looking at homes. This will help direct your search and keep you from getting your heart set on a home you can’t afford. Remember, just because you’re approved for a certain amount doesn’t mean you have to (or should) spend that much. Determine how much you’re comfortable paying each month for mortgage payments and refine your search to homes that fit in your budget. Once you have set your budget boundaries, be disciplined about searching within them.
Rushing to Make a Purchase — It’s easy to do, especially if you’re in a time crunch do to a job change and need to get moved ASAP. If possible, avoid making a decision on the spot after a whirlwind weekend trip to look at houses in your new city. After your first trip to look at homes, narrow down your top two or three and schedule a second showing of each. If a second showing isn’t an option, get out your camera and record the first showings so you can review them and decide when you’re not so rushed.
Getting Emotionally Attached — If you’ve just looked at a house for the first time and you’re already imagining your kids growing up in the home, then you may be too emotionally invested. At the end of the day, buying a home is a business transaction, and one that should be made with a clear head. If buying a home is an emotional decision, you could end up paying too much for a home that costs you big in repairs down the road. Step back and look at every aspect of the home. Get an inspection. And listen to the advice of your real estate agent when it comes to making an offer.
Buying for the Present — Most homebuyers are looking for a home they plan to live in at least five or ten years, if not a lifetime. If your purchase isn’t for the short-term, then be sure to consider future possibilities and buy a home that suits your long-term goals for you and your family. For example, if you have two children now, but hope to have more in the future, purchase a home that will fit your growing family, rather than buying one that is the perfect fit right now.
Snagging a Fixer-Upper…Unintentionally — If remodeling a home isn’t your goal, then be extra careful with your purchase. Start with a home inspection to ensure the bones of the home — electrical, plumbing and foundation — are up-to-code and in good repair. Accompany the home inspector so you’ll see the home’s flaws first-hand and know what repairs to request before closing.
Failing to Do Your Homework — Most homes come with deed restrictions and some may be part of a homeowner’s association, which places restrictions on what you can and can’t do with your home. Before purchasing any property, know the conditions that come with your purchase to be sure there are no conflicts with your plans for the home, such as a home remodel or addition. A good agent will ensure you have all the essential information on a home, but it doesn’t hurt to do your own research as well.
Not Saving Enough — Saving up for a down payment is only one piece of the financial puzzle of homeownership. You’ll need to account for closing costs (typically two to five percent of the home’s sale price) and property taxes to be paid on closing day. And then there’s the expense of other necessities you may need to purchase, such as appliances, tools, and even blinds. Aim to have at least two to three months of expenses saved up in addition to your down payment and closing costs to cover any unexpected costs that crop up in the first few months of homeownership.
Choosing the Right Lender — All lenders are not created equal, and just because you’ve been pre-approved by one lender doesn’t mean you must use that lender to purchase your home. Shop around and compare more than just quotes from different lenders. You want to work with an experienced lender who offers a range of solutions and who will be involved in your transaction all the way through closing and beyond.
Are you ready to start shopping for a new home? Contact PrimeLending today to start the pre-approval process. Our experienced home loan experts will work with you to finance a home that fits your needs and budget. Connect with a loan expert near you today.
All loans subject to credit approval. Rates and fees subject to change. Mortgage financing provided by PrimeLending, a PlainsCapital Company. Equal Housing Lender. ©2017 PrimeLending, a PlainsCapital Company (NMLS: 13649).