Buying a home is a major step in life. It’s important to take the time to do your homework and become informed about your options. First-time homebuyers often make mistakes that cost them money or make the process more difficult. If you’re thinking about buying your first home, be sure to avoid these common pitfalls:
- Not figuring out how much you can afford
One of first-time homebuyers’ biggest mistakes is not figuring out their budget before looking at homes. You need to know how much house you can afford before you start shopping around for your dream home. It’s also important that you don’t get so caught up in wanting a certain property that you overspend on it or overextend yourself financially because of it.
- Not getting preapproved
One of the most important steps in finding your dream home is getting preapproved for a mortgage loan. This means that you’ve been approved by at least one lender for a certain amount of money based on income, assets, and credit history — all factors used to determine how much money you can afford to borrow from lenders when purchasing a home.
Getting preapproved gives you leverage when negotiating with sellers because they know that if they accept your offer, the deal goes through immediately since there’s no need for additional paperwork or approval from their bank or lender.
- Not working with a real estate agent
While some people think buying a home without an agent is more cost-effective because there aren’t any fees involved, this isn’t true when it comes to finding the right house at the right price — especially if it’s your first time buying real estate.
A good real estate agent will help narrow down your search and find properties within your budget and needs. Working with an agent also ensures that your interests are protected throughout the process, which is important when dealing with large sums of money and investments like this one.
- Not saving enough for a down payment
The amount of money needed for a down payment varies depending on where you live and how much you want to spend on your house. Generally speaking, lenders require borrowers to put 20 percent down or more on their loans. To put it in perspective: If the average home costs about $250,000 today, that would mean putting $50,000 down — which isn’t easy for most people to do without saving up beforehand.
- Not shopping around for a mortgage
Many people fall into this category because they don’t know where to start when it comes to shopping around for a mortgage. Shopping around can save you thousands of dollars over the life of your mortgage. The best way to do this is by using an online comparison tool or visiting several local banks and discussing different options with them directly (this will also help you build relationships with local lenders).
- Not checking credit reports and correcting errors
You should check your credit report before applying for a mortgage loan, including getting rid of errors and improving your credit score. Your credit score is used in qualifying for a mortgage, so the better it is, the better chance you’ll have at securing competitive rates from lenders. Checking your credit report before applying for a mortgage can help ensure that no mistakes have been made (or, if there are any, that they’ve been corrected).
- Not considering first-time homebuyer assistance
Many first-time homebuyers don’t realize how much help they can get when purchasing their first property. Several programs can make buying a home easier and more affordable, including down payment assistance programs and low interest rate mortgages.
These programs may require income verification as well as other requirements, but they can provide valuable assistance when you’re looking for that perfect place to call home. So make sure you investigate all possible options before making an offer on your dream home.
- Falling for the first house
It’s tempting to just make an offer on any house that strikes your fancy. But it pays to take the time to look around and investigate other options before making an offer on something that might not be right for you.
There’s nothing wrong with falling in love with your first house — but don’t let excitement cloud your judgment when it comes time to sign on the dotted line. Make sure it checks off all of your must-haves before putting in an offer on that dream home.
- Skipping the home inspection
A home inspection is just as important as the other steps in the buying process. You should always get a professional inspection done before purchasing a home. Not only does this help ensure no major issues with the property, but it also gives you peace of mind that everything is in good working order. If there are any problems with the house, they can be fixed before closing on the sale or negotiated in terms of price or repairs made by the seller.
- Purchasing without a long-term plan
Buying a house is more than just signing papers and taking possession of keys — it’s about making an investment that will pay off for years to come. If you’re not prepared to spend the next 20 years making payments on your mortgage, then maybe buying isn’t for you after all. You should also consider whether it makes sense financially to purchase now versus later, considering how much time and money goes into buying a home.
- Cosigning your mortgage
A cosigner is someone who promises to pay the monthly mortgage payments if the primary borrower fails to do so. A cosigner can be a parent or other family member or friend with good credit who agrees to help out with the down payment or even provide additional funds for closing costs and other expenses associated with buying a home.
While this sounds like an ideal solution, it’s really not a good idea, especially if you’re just starting out in life and have little financial security. If anything goes wrong with your loan (you miss payments or default), both parties will be responsible for repayment — even if the other party did nothing wrong.
- Not budgeting for closing costs
Many first-time homebuyers don’t realize how much money they’ll need for closing costs (an average of 4 percent of the purchase price) until after their offer is accepted. Closing costs can include attorney fees, appraisal fees, property taxes, title insurance, and more.
Don’t assume all fees will be rolled into your mortgage loan amount — some fees are due at closing. Ask about all potential costs when shopping around for a loan to avoid sticker shock.
The first-time home-buying process can be overwhelming. Turn your first-time home-buying adventure into a successful and stress-free experience with the help of Weidel Real Estate. Our team of expert agents is dedicated to guiding you through the entire process, ensuring you avoid common pitfalls and mistakes. With our extensive knowledge and personalized assistance, you can confidently find your dream home and make a smart investment for the future. Don’t navigate the real estate market alone – let Weidel Real Estate be your trusted partner in this exciting journey towards homeownership.