Buying your first home is exciting, but you will likely make mistakes. Once you know where you want to buy a home, you will need to start making the financial steps toward making that dream a reality.
You want to try to avoid some of the common mistakes that a first-time homebuyer makes, like failing to account for insurance and taxes.
Buying your first home is as difficult as it is exciting. That’s why it’s easy to make mistakes.
If you are planning on buying a house for the first time, continue reading to find out the top 7 common mistakes that you can avoid.
1. You Didn’t Consider Renting
While buying a home offers a lot of great benefits, like home equity, it may not always be the best financial decision. Before you take the plunge into buying a home, you should consider your options.
As a renter, you don’t need to worry about the same things that a homeowner does. A homeowner needs to worry about insurance, taxes, water bills, and future maintenance costs.
For example, if you have a hedge that needs to be maintained, you may decide you don’t have the time. You will hire someone else to do the work for you.
These expenses can quickly add up and make buying a home seem a little bit scarier. These are things a first-time homebuyer may fail to consider.
2. Making a Small Down Payment
The down payment you make doesn’t have to be monumental. However, you should avoid making a down payment that is too small.
Some people may need to make a small down payment, and there are loan programs that will allow it.
Many recent first-time homebuyers regretted not saving up more money before they bought their home. If you can save up to make a larger down payment, you will be able to secure a smaller mortgage. This means lower payments.
This will ultimately become a personal judgment call. You will want to be sure that you are comfortable with the monthly payments.
3. Saying Goodbye to Your Savings
Speaking of savings, you worked hard for that money. When you buy a home, you cannot always be sure of the future maintenance the home may need.
You don’t want to get caught penniless when the rain starts to fall. This could mean financial ruin.
Even though a larger down payment will mean lower monthly payments, everyone needs a savings fund. If you can save enough money to make a down payment and still have some of your savings left over, you should be fine.
You never know when something will go south, and you don’t want to fall down a well.
4. Not Getting Help as a First-Time Homebuyer
As a first-time home buyer, it will be useful to have a good real estate company backing you up through the process. You may even wish to seek the assistance of a good loan officer and a lawyer.
As a first-time homebuyer, you don’t want to walk into the process completely blind. A listing agent will only show you their own listings.
A buyer’s agent will save you the trouble of dealing directly with the listing agent. If you decide to hire an agent or even a loan officer or lawyer, be sure to have them provide you with references.
As a first-time buyer, you want to make sure you are getting independent advice.
5. Relying Too Much on the Internet
The internet is lovely. Information about anything is available at the touch of a button.
Sometimes people can become too comfortable using the internet. The internet can be a great place to begin your search for homes or loans.
Working with a person can help clarify some of the nuances of home buying.
Talking with a loan officer can help you understand the terms and fees before you buy. This will save a lot of pain later.
Additionally, it is useful to have someone who knows the ins and outs of a given housing market. While you can find general home values online, these may be misleading.
An agent can give you insight into a housing market that you cannot get online.
6. Getting One Rate Quote
If you are shopping for a home, it may be useful to compare offers. The interest rates on a mortgage will vary between lenders. So too will closing costs and other fees.
It’s common for first-time buyers to skip this step and accept the first offer they receive. If you do this, you could be doing yourself a huge disservice.
Getting just one more quote could save you. If you are worried about your credit score, keep in mind that any mortgage applications made within 45 days will be considered one credit inquiry.
7. Expecting the Home’s Value to Appreciate
Many first-time buyers go in believing that they are making a worthwhile investment. While this is sometimes true, it is uncertain.
When you buy a home, there are a lot of unforeseen expenses, like leaking pipes or mowing the lawn.
It can be nice to gain equity in your home, but it will still not be a very liquid asset. Housing markets can be unpredictable, and this can be a dangerous approach for any buyer.
If you are looking to buy your first home, look for a home you are wanting to live in. If you are interested in making investments, consider buying stocks instead.
Having Fear: The Biggest Mistake
As with all things in life, it is better to be confident. If you feel you are ready to become a first-time homebuyer, then start making some phone calls.
With the help and support of a good agent and your friends and family, you can buy a house that will suit your needs for many years to come.
Remember that this is a big investment that you should be proud of.
If you have any questions about the process of buying a home, contact us today.