Buying a home for the first time can be complex. There are a lot of moving parts and you’ve never done this before. It is normal to feel a bit overwhelmed. Luckily we have experience working
Common First-Time Home Buyer Mistakes to Avoid
Dated: August 18 2021
Buying a home for the first time can be complex. There are a lot of moving parts and you’ve never done this before. It is normal to feel a bit overwhelmed. Luckily we have experience working with first time home buyers and have combined common mistakes to avoid. Learn from them and you may have a smoother home buying process.
Forgetting About Costs:
Your mortgage will not be the only cost when it comes to buying a home. It is a command mistake where buyers forget about the smaller costs like property insurance, taxes, electric and water bills, and other fees that may start to pile up if not prepared. Before buying a house, you may need to look further into your savings to figure out if you can pay for all of these additional charges and prepare your budget beyond just the purchase of the home.
It is also a common mistake that buyers forget about closing costs and they can be significant. These costs—including attorney fees (if applicable depending on your state) and title insurance—are due when you sign final mortgage loan documents. Typically, closing costs are around 3 to 5 percent of your home’s purchase price, so add this cost to your budget.
Looking for a Home Before getting Pre-approved:
When you find a house and decide you want to buy it, you don’t want to spend time wondering if you can afford it. Establishing your budget and knowing that you are a qualified buyer from the beginning of your search will make the process much easier and more efficient. Especially in this competitive market, you could lose out on a property you love if you aren’t preapproved for a mortgage.
Being Too Picky:
When it comes to buying a home there is nothing wrong with knowing what you want. But when your “must-have” list gets too long and specific, your search for a perfect house will be much longer. It is common with first time home buyers to run into this issue but also remember that you can make changes once you move in. In order to save yourself time during your search take a moment to establish what you absolutely need versus what you want/nice to have.
Ignoring the Future:
When buying a house you want to think into the future and how long you plan to live there for? If it is for a long time, think of the potential future when picking the right home and neighborhood to move into. For example you may decide to have kids in a few years, and then you’ll have to worry about another set of questions. Will there be enough bedrooms? Is the house located in a good school district? These are definitely things to think about when buying your home.
Talking to Only One Lender:
First-time buyers often get a mortgage from the first (and only) lender or bank they talk to. That’s a big and common mistake. The more you shop around, the better basis for comparison you’ll have to ensure you’re getting a good deal and the lowest rates possible. Instead of going with the first lender you talk to, we recommend you shop around with at least three different lenders, as well as a mortgage broker. Compare rates, lender fees and loan terms. Don’t discount customer service and lender responsiveness; both play key roles in making the mortgage approval process run smoothly, especially now when many lenders are backed up with applications.
Being Careless with Credit:
When you get your pre approval, a lender pulls your credit reports to ensure things check out. A common mistake is that people forget that it is pulled again just before closing. They do this before closing because they want to be sure nothing has changed in your financial profile.
This impacts buyers because any new loans or credit card accounts can jeopardize the closing and final loan approval. Buyers, especially first-timers, often learn this lesson the hard way. We recommend that during the homebuyer process to avoid opening any credit cards, close existing accounts, take out new loans or make large purchases on existing credit accounts in the months leading up to the closing. As well as pay down any existing balances to keep your available credit limit under 30%, and pay your bills on time and in full every month.
Ignoring FHA, VA and USDA Loans:
In this market of rising home prices and as a first time home buyer you may be cash-strapped. If you have little saved for the down payment or your credit isn’t stellar, you might have a hard time qualifying for a conventional loan. It is easy for many to just assume there are no financing options. But that is a common mistake many make because they overlook loan programs that they may qualify for. There are three government-insured loan programs that are worth not overlooking: FHA loans, VA loans, and USDA loans.
So whether you’re just starting to think about buying your first home or you have already spent some time looking, there may be a lot to learn from this list of mistakes. If you have more questions about the buying and selling process give us a call at 718-995-2000.
Ruke is our administrator here at EXIT Realty Private Client Bronx office. She works in close coordination with all of our agents ensuring that our office is supported and running efficiently. With he....