When you’re ready to buy your first home, it can be a bit overwhelming. You’ve never gone through the process before and there’s so much to consider.
Maybe you’ve already done your research and you know what the process should look like. While you may have an idea of what to expect, even the most prepared first-time homebuyers still make mistakes.
By gaining an understanding of the most common mistakes made by first-time home buyers, you’ll be able to avoid them. Here are some of the mistakes you might make as a first-time buyer.
Overextending your Finances
Your lender might approve you for an amount you really cannot afford. This is pretty common and some first-time home buyers will take the maximum allowed when buying their first home.
This is a mistake you want to avoid or you could be setting yourself up for failure. Make sure you look at your monthly budget and consider all the expenses a new home comes with before making your final decision.
Just because you were approved for a $300K mortgage doesn’t mean you have to buy a $300K home. Look at your budget and make sure you know how much you can actually afford to spend each month. Base your decision off your own number, not just the pre-approved amount given to you by your lender.
Shopping Without a Pre-Approval Letter
One of the most common mistakes first-time homebuyers make is shopping before they have any clue what they can actually buy. Maybe they used a mortgage calculator online and expect to get approved for the amount they believe they can afford. No matter how fun it seems, shopping without a pre-approval letter is a mistake.
The last thing you want to do is fall in love with a home only to be told you cannot get approved for the necessary mortgage. Even worse, you could get approved, but it’s at the very top of your budget and you really cannot afford the monthly payment.
Have a little patience and wait for the pre-approval letter from your lender. Then, run your own budget numbers to determine the real amount you should spend on your home before you start shopping.
Financing Something Else During the Process
When you start a serious search for a new home, it’s time to stop all unnecessary financial activity until you’ve moved into the home. You don’t want to buy a new car, take out a loan for furniture, or finance anything else.
Your lender pre-approved you based on specific criteria. If anything changes, you may not get approved for the mortgage you need to buy the house.
Make sure you don’t screw up all your hard work by financing anything else during the process. Even something small can adjust your credit score and cause issues.
Becoming a Perfectionist
First-time home buyers commonly want to buy the perfect home the first time. While this may seem reasonable to some, home shopping often comes with plenty of give and take.
Waiting for the perfect home could have you renting for the rest of your life. It’s best to take a more realistic approach and realize you will likely not get every single feature you desire when you buy your first home.
Create a list of the things you absolutely need in a home and the things you want. You shouldn’t have to settle on your list of needs, but anticipate you won’t get every single thing on your list of wants.
Underestimating Repair Costs
If you plan to buy a home in need of a few repairs, you want to make sure you know what the repairs will cost. A surprise repair bill after you’ve moved in is the last thing you need.
As a first-time homebuyer, don’t make the mistake of only getting one quote or trusting a quote provided by the seller. If something needs repair, get a few quotes to ensure you have a good idea of the real cost for the repair.
Make sure you have a home inspection done and if something does show up, make sure you use it to negotiate. Home repairs can add up fast and the last thing you need is a huge bill after buying your first home.
First-time home buyers make many common mistakes because they haven’t bought a home before. Even veteran buyers can be susceptible to making mistakes.
One of the sure-fire ways to ensure you don’t make any mistakes during the home buying process is hiring the right real estate agent. If you hire a good local agent and you listen to their advice, you’ll be less likely to make these first-time homebuyer mistakes.