Buying your first home comes with many big decisions, and it can be as scary as it is exciting! It’s easy to get swept up in the whirlwind of home shopping and make mistakes that could leave you with regret later on. Here are some of the most common mistakes that we see with first time home buyers...
Looking for a home before talking to a mortgage professional
Mistake: Many buyers wait until to talk to a mortgage professional, thinking that they don’t need to look into mortgages until they have found a home they want to buy. This could lead to them finding a home that they can’t truly afford, or potentially missing out on their dream home because another buyer was better prepared.
Solution: Make sure to talk with a loan officer before beginning the homeownership journey. A loan officer can not only help determine affordability but with a prequalification or preapproval in hand when the right home does come along your offer will be that much stronger. Additionally, you’ll know that your mortgage team is ready and waiting to get moving as soon as the accepted offer is in hand.
Assuming you need to put 20% down
Mistake: Assuming you need to put 20% down on your home purchase and that if you can’t that you shouldn’t be purchasing.
Solution: Make sure you look at ALL your options, a down payment is often cited as the biggest hurdle for first time home buyers. With all the down payment assistance programs available, your down payment doesn’t have to be a source of unease. Talk to your loan officer about all the programs that are available to you. You may find that the down payment you’ve been saving is more than adequate for preparing you for the move to homeownership. Some programs even offer zero down options!
Not paying attention to your credit
Mistake: We know that credit is a factor in purchasing your own home, but many buyers don’t realize that it’s a factor throughout the process, not just the beginning. Typically, a lender will do a credit pull both at the beginning and the end of the mortgage process to ensure that nothing major has changed.
Solution: Avoid any major purchases or opening any new credit from the prequalification through closing. Make sure to continuing to pay all bills on time every month and talk to your loan officer with any questions. They are your greatest resource during the entire process and will be able to best guide you.
Not accounting for the costs of homeownership
Mistake: As a new homeowner there are more things to consider than just your monthly principal and interest payment, such as property tax, homeowner’s insurance, utilities and general maintenance. Not having enough of a cushion in your monthly budget can quickly put a homeowner in the red if they’re not prepared.
Solution: Your loan officer can help you crunch numbers and set a budget BEFORE you even begin looking at homes. Considering different mortgage programs, shopping around for insurance quotes, are just some of the things your Loan officer can help with. Finally, consider aiming to set aside 1-3 percent of the purchase price annually for general repairs and/or maintenance.
Not getting a Home Inspection
Mistake: Many home buyers skip the home inspection because they don’t want another cost and they mistakenly believe that a home inspection is just another appraisal. Your home inspection is possibly one of the most important, non-required services you can get yourself when purchasing a home. Professional inspectors are looking for repairs that the average person would never think to look for, including structural defects, which could save potential buyers thousands!
Solution: Easy, get a home inspection. While an appraisal is evaluating the price of the home as it is on the housing market, a home inspection, can show you if the home needs big repairs (seen or unseen) and may help a potential buyer negotiate with the current owner to fix the issues or adjust the price accordingly.