Be aware of these mistakes first-time home buyers commonly make.
For a first-timer, the home-buying experience can be intimidating and even a little overwhelming at times (understandably so!)
You’re looking for a home you can live in and love for a good amount of time, at a price you can afford, on top of learning and understanding the entire real estate buying process–talk about stressful!
Being aware of, and doing whatever you can to avoid making these common first-time home buyer mistakes, will take some of the burden off of your shoulders allowing you to enjoy the process–after all, it is pretty rewarding!
1. Not knowing what you can afford
It’s easy for a first-time home buyer to get caught up in the excitement of the house-hunting process and end up stretching their wallet to purchase a home they can’t afford. Don’t be this person, you will run the risk of ruining your entire financial future. Determine what you can afford by first, listing out all of your monthly (and any annual) expenses. Leave out what you pay for rent now because once you’re a homeowner it’ll be irrelevant, but include everything else from student loan and credit card payments to groceries and vehicle costs. Not in as bad of shape as you thought?
Not so fast, don’t forget the additional costs that come with purchasing and owning a home–expenses that as a renter, you weren’t responsible for. We can’t stress how important it is to account for closing costs, property taxes, homeowners insurance, and possible repair costs when establishing what you can afford. Now, subtract all of these expenses from your take-home pay and you’ll be left with how much you can afford to spend on a new home. Throughout this budgeting process, use our mortgage calculator to get an idea of what your monthly home mortgage loan payments would be. We base our calculation on your home’s sale price, the term of your desired loan, your down payment percentage, and your loan’s interest rate to give you a close estimate.
To avoid putting yourself in a dangerous situation, have your real estate agent tailor your home search to only include properties you can afford–trust us on this one, you’ll only make it harder on yourself if you start getting distracted with houses outside of your range.
2. Skipping the pre-qualification and pre-approval process
Sometimes, what you think you can afford and what the bank thinks you can afford isn’t the same and you’d rather know that early on than when you can’t buy that house you fell in love with. This is why it’s essential to go through the pre-qualified and pre-approved process with your bank or lender before or early on in your home search.
During the pre-qualification process, your bank or lender will assess your overall finances (assets, debt, and income) and give you an idea of the mortgage size you will qualify for. A mortgage qualification is quick and can often be done over the phone or online and it is almost always done at no cost. The most important thing to know is that a qualification is not a sure thing.
When you’re ready to start the pre-approval process you’ll complete an official mortgage application and supply the lender with the necessary documentation to perform an extensive check on your financial background and current credit rating. From here, the lender will tell you the specific mortgage amount you’ve been approved for (and maybe the interest rate you can expect to see).
Note: This might seem obvious but is a mistake made often by first-time buyers. Don’t load yourself up with debt during the process of buying a house as new or extra debt could be the difference between being approved and not being approved.
The pre-qualification and pre-approval process will show you even further which homes you can afford and which homes should stay on your wish list.
3. Thinking there is a “perfect home”
As a first-time home buyer, it’s best to go into a new home search with an open mind, free of expectations, and ready to make a few compromises. While you might have a picture of the “perfect home” in your head, it may be tough to find a house that fits every aspect of your criteria while remaining within your price range (although we’ll try to).
A first-time buyer’s goal should be to find a home that fits most of, if not all of their immediate and future needs. We say needs because although you might want hardwood floors and white cabinets you don’t need hardwood floors and white cabinets (not just yet, at least). Think of small cosmetic things like these and others including, wallpaper, paint color, carpeting, etc. as future fixes. Weigh heavier on things you can’t change like location and size.
First-time buyers don’t always do so but strive to find a home they add value to. Look past the staging and cover-ups of minor issues to ask yourself if this is a home that is going to help you climb the equity ladder and ultimately serve as a good investment–now that’s the perfect home.
4. Foregoing professional help
There are so many reasons to work with a REALTOR® when buying a home (especially if you’re a first-timer)! From their in-depth industry and housing market expertise to their intimate area knowledge and lengthy professional network–allowing a professional real estate agent to guide you through the buying process should be a no-brainer.
5. Skipping the home inspection
When you’re looking at the costs associated with buying a house, cutting out the expense of getting the home you’re looking to buy inspected can seem like a tempting way to save a few dollars. In reality, if there are any major issues and they’re not found before you buy the home, you will end up spending more to fix them than you would have spent on an inspection in the first place.
The issues an inspector will commonly find range from water and moisture to structural and roof damage. An inspection will shed light on these issues before you own, preventing any surprises down the road.
6. Not thinking about the future
It’s impossible to predict exactly what the future of the housing market holds and for that reason investing in real estate can be tricky. Talk with your real estate agent to get the gist of what the future of a particular area will look like. Most first-time buyers will purchase a house without considering the future development plans for the rest of their neighborhood, the trend in home values throughout the area, zoning laws, etc.
Guiding You Through the Process, Every Step of the Way
Buying a home is a very rewarding experience — 10/10 would recommend! At The Redbud Group, we want you to be aware that first-time home buyers commonly make mistakes so you can avoid making them yourself.
Sure, you’re bound to have a question or two, and you might even make a small mistake somewhere along the way — that’s what we’re here for. Click the link below to speak with one of our expert agents!
