5 Mistakes to Avoid When Buying Your First Home
Whether you’re a young couple looking to start a family or a life-long apartment dweller, buying your first home can be a scary experience. To make sure you get it right, read about these 5 home-buying mistakes you should avoid.
Most of us look forward to buying our first home and the sense of accomplishment that comes with it. But when you start learning about the process, you suddenly realize how many ways it can go wrong… far too many for comfort.
If you’re thinking about buying your first home, here are some of the key mistakes to avoid.
Home Buying Mistakes to Avoid
Courtesy of our real estate experts as well as people who have made these mistakes before, here are some common home buying mistakes to avoid:
1 – Underestimating All The Costs Involved
Most people have a home-buying budget in mind. They calculate how much of a down payment they’ll need and as soon as their savings account reaches that magic number, they hit the open houses.
But first-time buyers tend to forget several of the costs involved in buying a house, and many of them need to be paid out of your pocket during the purchasing process.
Every situation is unique, but here are some of the most common costs you should plan to cover:
- down payment
- closing costs
- home inspection
- immediate repairs
- earnest money/deposit
- pre-payments for insurance & taxes
- initial association fees
You should ask your real estate agent which costs may apply to your purchase at the beginning of your search, although it can also vary from home to home.
2 – Buying Too Soon
Every young adult has heard the advice that renting is throwing your money away, but that’s not always true. When you’re deciding whether to rent or buy a home, ask yourself these questions:
- How long do you think you’ll want to stay in this location? If you buy and sell homes too frequently, it can cost you a fortune in closing costs.
- Is your credit strong enough to get you a low-interest rate on your mortgage?
- Have you saved up a 20% down payment in order to avoid mortgage insurance? This isn’t necessarily a “must” but it’s a great way to save money.
- Is your area’s real estate market at a high point? If so, you could pay too much for your new home.3
3 – Forgoing a Home Inspection
We can never overstate the importance of a home inspection. This gives you a chance to make sure you’re not buying a money pit and to negotiate for the repair of any existing issues.
A home inspection is also crucial on a brand new home, because errors could have been made in construction.
4 – Not Hiring a Real Estate Agent
It’s never wise to pass up a real estate agent when buying a home, but especially when you’re a first-time buyer. Even if you yourself are a real estate agent, it’s easy to make decisions based on emotion rather than your professional training, so hire an unbiased agent.
5 – Waiting to Apply for a Mortgage Until You’ve Found a Home
It sounds like putting the cart before the horse to apply for a mortgage before you start house-hunting, but it’s the exact opposite.
Getting a pre-approved mortgage lets you know exactly how much you can spend and makes your offer more attractive to a seller. It also makes the process go faster, which is a win for everyone.
Worried about your pre-approval expiring? Most pre-approvals are valid for around 60 days, although it’s common for them to vary between 45 and 90 days. If it takes longer than that to find your dream home, you can usually renew it easily.
Buying Your First Home Seamlessly
Buying a house is like planning a wedding: there’s bound to be a hiccup or two. But steering clear of the mistakes above can help you make sure that buying your first home is as seamless as possible.