While buying your home will be exciting, it can also be uncertain. Are you doing the right thing and making the right choices? Buying a home is a massive financial commitment, and making the wrong decision could be costly.
You can still make plenty of home-buying mistakes even if you are a seasoned homeowner. But if you are a first-time buyer, the chances of falling into one of the many pitfalls increase.
If you are better aware of the possible problems, you are less likely to fall for the typical home buyer mistakes, even if this will be your first time.
We look at the first-time home buyer mistakes you’ll want to avoid. Let's examine what not to do!
Beginning Your Search Before Preapproval
Preapproval from a mortgage lender will show how much you can spend on a home. If you don't know this, you will waste time looking at properties out of your price range.
If you aren’t preapproved, don't expect your offer to be taken seriously by the seller. The listing agent will likely ask the buyer's agent if they have lost their mind showing homes to buyers without proper qualifications.
Not Shopping Around Between Lenders
While you might think the first offer from a lender is perfect for your situation, you don't know unless you compare it to other lending options.
The difference between mortgages from different lenders could be many thousands of dollars throughout the home loan, so you must compare what's available.
Understanding how to get a mortgage is essential for a first-time home buyer.
Ignoring Government-Backed Programs
The FHA, USDA, and VA offer loans that could make it easier to buy. They might offer better terms than could help you buy a home sooner.
Check what might be available from these programs before choosing your mortgage. Many first-time home buyer loans could fit perfectly.
When purchasing your first house, it is vital to shop rates and mortgage terms.
Emptying Your Savings Account
Though you might want to pay the most significant down payment you can afford, that isn't a great idea.
Though having a larger down payment could remove the requirement to pay private mortgage insurance, it might leave you with nothing to cover unexpected problems. If you don't have much money when you first move into your home, you won't have an emergency fund if something goes wrong.
Changing Your Credit Situation After Preapproval
If you do something, like apply for new credit or miss a payment, it could change whether you still qualify for your preapproved mortgage.
If your finances change just before closing, you could find you need to look for a new mortgage or back out of the deal completely.
Buying a Home Without Representation
One of the dumbest mistakes first-time home buyers make is going directly to the listing agent. Not having representation with your own Realtor is a significant downside.
You want a fiduciary in your corner to ensure the right decisions are made and you're protected throughout the transaction.
Focusing on the House But Ignoring the Neighborhood
While the house's features will be necessary, you don't want to live in a neighborhood that will make you unhappy. Changes can be made to the home, but you can't do much about the neighborhood.
A common first-time buyer blunder is focusing too much on the home and not enough on the surroundings.
Looking for Perfection
You are unlikely to find a home that ticks every box. It would be best to decide what your must-haves are and what you can compromise on. Otherwise, you will take longer to find a home and spend more.
Many buyers will pass up on homes that they later regret.
Emotional Decisions
It is easy to fall in love with a home, but this could mean you pay over the odds for the property. Don't become emotionally attached to a property; you must have a budget and stick to it.
Buyers' remorse will increase dramatically when quick decisions are made. It is the opposite of looking for perfection.
Stretching Your Finances
Though you might fall in love with a home, don't commit to a property that could push your finances to breaking point.
Even though you will qualify for a certain amount, it isn't necessarily a good idea to use all of that money to buy your property.
You should always have ample funds in reserve in case a financial tragedy strikes.
You Don’t Need a 20% Down Payment
While you might have heard that a 20% down payment is necessary, that isn’t the case. You won't need anywhere near that much money to buy your first home.
Though you will avoid private mortgage insurance and might get better terms if you have 20%, you can buy less.
Conventional loans allow 3% down payments and the FHA 3.5%, and you could buy with zero down in some circumstances.
Gifts to Help With The Down Payment
Your family might want to help with your down payment, which can create problems. Ensure the lender can verify the money's origin with bank statements and a gift letter.
Getting gift money is great, but not when it doesn't qualify to be used.
Hidden Costs
When you own a home, there are more expenses than your monthly mortgage payments. There are also tax assessments, insurance, utilities, and maintenance to pay for, and you need to be ready for these costs.
Remember Moving Costs
After you have paid the closing costs, you will still need some money to help you move. Even if you aren’t hiring movers, you might need to rent a truck and buy boxes.
Though you could make most of the move, it can still get expensive. Make sure you have the budget to pay for the move.
Final Thoughts on Home-Buying Mistakes
Mistakes are easily made when you're doing something for the first time. It will be worthwhile leaning on the pros you're working with for help.
Focus on doing significant due diligence when buying your first home. The better prepared you are, the less likely you'll make blunders.
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