First-Time Home Buyer Mistakes

Buying your first home can be both exciting and nerve-wracking. For a lot of first-time home buyers, purchasing a house fulfills a lifelong dream. With so many steps involved in the purchasing process, many would encounter first-time home buyer mistakes. Let’s look at some of the common home buyer mistakes and be informed on how you can avoid them.

Starting the Search Before Applying for a Mortgage

Before doing a search and falling in love with a property you have been eyeing, consult a mortgage lender first. Taking the time to apply for approval upfront is beneficial to you as home buyer. When you get preapproved, it will help you get a handle on costs and manage any concerns when you do go to make an offer. Also, being approved makes a buyer appear more serious to sellers.

Understand the difference between prequalified and preapproved. To ease your qualification process and help get the best terms on a loan, work to improve your credit score.

Also, consult at least three different lenders and get their rate quotes all on the same day since rates change regularly. Compare their rates, lender fees, and loan terms.

Not Working with a Real Estate Agent

Buyers can find their first property without the help of a real estate agent. But getting a good real estate agent is helpful in your process. Real estate agents help you find the right home to purchase, negotiate the terms of your purchase, and works with you through all the processes.

Real estate agents are experts and can help ease any anxieties you may have and will make the home buying process go more smoothly for you.

Buying a House More Than You Can Afford

Buying a home more than you can afford can put you at a higher risk of foreclosure should you encounter financial issues in the future. Focus on what monthly payment you can afford rather than fixating on the maximum loan amount you qualify for.

Skipping the Neighborhood Tour

When you buy a property, you also should consider where you buy it. The best and happiest home buyers get to know more about where they’re planning to live.

Settle on what are your priorities in your community. Depending on your needs and preferences, you might want to do a research about school ratings, commute time to work, proximity to hospitals, and other factors. You could also visit the neighborhood at different times to get a sense of traffic flow in the area.

In addition, if you are shopping for homes within an HOA, know the rules. Membership in an HOA is mandatory and homeowners must abide by the community rules. Before purchasing a property within an HOA-governed community, understands its rules, fees and restrictions. Ensure that they align with your lifestyle.

Overlooking FHA, VA, and USDA Loans

Some first-time home buyers may have difficulty qualifying for a conventional loan. Look into the government-insured loan programs backed by the Federal Housing Administration (FHA loans, U.S. Department of Veteran Affairs (VA loans) and U.S. Department of Agriculture (USDA loans). These mortgages are often less expensive than other mortgage loan types.

Skipping the Home Inspection

A home inspection is an examination of a home, its systems, and appliances performed by a licensed professional. Home inspections protect you and lenders in cases of serious issues with the home’s structures. If the house needs big repairs that you can’t see, an inspection helps you negotiate with the seller to have the issues fixed or adjust the price accordingly.

Not Budgeting for Other Costs

Closing Costs

Beyond the downpayment, buying a house involves closing costs. These costs include attorney fees, title insurance, lender fees, property taxes, appraisal fees, and more. In general, expect to pay about 3-6% of the purchase price of the home in closing costs, on top of the downpayment.

Homeowners insurance

This insurance covers damage to your house and the assets inside it. This is is typically required by the mortgage lender.

Moving costs

Between renting a truck or hiring movers, buying boxes, and dealing with storage, moving can be expensive. Don’t forget in your budgeting the costs of moving.

Property Taxes

These taxes are paid monthly and should be included in your budget.