Top Mistakes Made By First-Time Home Buyers
8 Top Mistakes First-Time Home Buyers Make
Buying your first home can be truly exciting. But it can also be stressful, overwhelming and intimidating, even for the seasoned, repeat home buyer. The first-time homebuyer, however, can be subject to additional stress by virtue of not knowing the ropes or being familiar with the process. There are many opportunities for mistakes that a first-time buyer can make that can derail or add challenges to the loan process. We are here to help. This article is designed to help you avoid many of those potential pitfalls. Here is an overview of the top 8 mistakes first-time homebuyers make.
Looking for a home before applying for a mortgage or without being pre-approved
The real estate market is highly competitive and it is typically a "first-come first-serve, you snooze you lose" scenario. Be aware that a sale or purchase opportunity is truly only available to those who are qualified or pre-approved. Looking for a home without being pre-approved is one of the most common mistakes made by a first-time homebuyer. It's like going shopping without your wallet or purse - you can't buy anything and the merchant will not take you seriously. So be prepared and ensure that you don't miss out on the opportunity to bid on your dream home by being pre-approved. (Contact us and let us help with that process.)
Being careless with credit
Another common mistake that first-time homebuyers tend to make is being careless with credit. Some examples of being irresponsible with credit are:
- Opening new credit accounts / seeking new credit
- Making large purchases / increasing your utilization or DTI
- Missed/late payments
Check out these trusted do's and dont's as general recommendations to follow.
Seeking to buy the wrong house
Another common mistake made by most first-time homebuyers is seeking out the wrong house. Try not to get caught in the moment and resist 'falling in love' right away with any particular house. As it applies to your needs, ask yourself:
- Is it in my ideal neighborhood?
- Is there too much traffic?
- Too much noise?
- The right schools?
- Is it close to public transportation? (if that is important to you)
- Does it fit my lifestyle? (Big enough, enough rooms, enough baths etc.)
In other words, will this new home help provide the quality of life that you are seeking. On the other end of that spectrum, don't make the mistake of seeking out "unicorn" homes (homes that check every checkbox on your dream list) as those homes may not exist.
Not considering or exploring all possible loan types and evaluating for best fit
The excitement of buying a new home can cause you to jump on the first loan offer you receive. However, this can be a huge mistake. Instead, please take the time to shop around and explore your possible loan options to ensure you are getting not only the best rates, but also that you are getting the type of mortgage that is truly the best fit for your life situation both short and long-term. There are many types of mortgage programs available, fixed rate, variable rate, VA, USDA, conventional etc., and while it's possible you may qualify for more than one, chances are ONE of them might be the best fit for your particular life condition. Be sure to explore those options to make sure you are making the right choice.
Miscalculating the hidden costs of homeownership and not having enough money saved
Homeownership is riddled with hidden costs. Being a homeowner means you have to keep up with utilities, maintenance, upgrades, and much more. So, before you embark on this journey, be prepared to pay unexpected hidden fees.
Buying a House You Can't Afford
Buying a house on the maximum edges of your affordability spectrum should be looked at and analyzed with deep scrutiny. A mortgage is a long-term investment, so it is recommended you take a close look at your financials to find the right number to target. You don't want to be house-poor or not in a position to respond to life crises, needs or emergencies because you are tapped out and at the edge of what you can sustain on an ongoing basis. We can help guide in making that decision.
Not asking your lender enough questions
Depending on the circumstances, mortgages and loans can be complex and be prone to fees and clauses you may not be aware of, or that are not easily understood. Leave no question unanswered. We are here for you.
Not sourcing cash deposits
Lastly, one common mistake made by first-time homebuyers is failing to source cash deposits. This is very important and can introduce tough challenges to overcome in the process. Please make certain that you are able to source your cash deposits, hence proving the legitimacy of that deposit and its impact on your financial profile.
So there you have it. While the above list does not represent all the possible mistakes first-time homebuyers can make, it is certainly a great place to start. Avoid these mistakes and set yourself up for success as a first-time homebuyer. And remember we are here for you, dedicated to your success and invite you to contact us for a free consultation or help answer any questions you may have.