Embarking on the journey of buying your first home is an exciting endeavor. However, amid the excitement, it’s easy to stumble into common pitfalls that many first-time homebuyers encounter. From overlooking crucial details to underestimating financial aspects, these missteps can turn what should be an exciting milestone into a stressful experience. In this short guide, we’ll look at seven common first-time homebuyer mistakes to avoid, empowering you for a more rewarding homebuying experience.
1. Home shopping before getting preapproved
When you decide to start your homebuying journey, it’s natural to want to jump right into looking for a home. However, home shopping without getting preapproved for your mortgage first is usually a mistake. A mortgage preapproval shows you how much home you can afford, helps detect any potential issues with your credit and shows home sellers that you’re a serious buyer. Getting preapproved is fast, easy and free, so contact your lender to get started before you begin your home search.
2. Not budgeting for your new home
Owning a home can be a great investment, and it often costs less than renting a comparable property after just a few years of ownership. That said, it’s still important that you budget for the cost of your home purchase and the ongoing costs of homeownership to ensure you can comfortably afford your purchase. According to one common rule, no more than 30% of your pre-tax income should go toward housing expenses. Your loan officer and real estate agent can help show you your expected upfront and monthly costs so you can plan accordingly.
3. Rushing the process
In a hot real estate market, a healthy sense of urgency can help you compete against other homebuyers. However, needlessly rushing through your homebuying process can also result in costly and avoidable mistakes. If possible, give yourself ample time to understand the homebuying process, learn about the current market, view multiple properties and evaluate different options. Getting in touch with your loan officer and real estate agent as soon as you’re ready to start your home search should allow them to prepare you for an unrushed buying experience.
4. Making emotional decisions
The homebuying process can come with a lot of emotions, from the thrill of finding a home you love to the anxiety of making major decisions. Since a home purchase is one of the biggest investments of most people’s lives, it’s crucial that you rely on facts, figures and research rather than letting emotions drive your judgement. Set your budget and outline your wants and needs for your home so you have a plan to follow, avoid getting attached to any home too quickly and expect some ups and downs during the process. If emotions run high, take some time to cool down before acting, or lean on your real estate team for guidance.
5. Fixating on the home over the community
It’s easy to get so focused on evaluating a home you’re considering that you forget to take a good look at the community you’re buying into. Purchasing the perfect home in a far-from-perfect location can be a shortsighted decision. When looking at properties, be sure to assess the community as well, including local amenities, the school district, crime and traffic safety, noise levels and commuting time. Your real estate agent can provide valuable insight, and driving or walking the neighborhood yourself can be a great form of research.
6. Not considering future needs
When shopping for a home, it’s important to evaluate how well each property meets not only your current needs but your future ones as well. Can the home accommodate changes to your household such as children, pets and elderly relatives? Is the location suitable for potential job changes? How long do you want to stay in the property before upgrading or downsizing? Thinking ahead like this can help ensure your new home can accommodate the upcoming milestones in your life.
7. Being careless with credit
As any good lender will warn you, small actions with your credit can have a big impact on your home financing. When you’re preparing to buy a home, any changes to your credit profile could potentially result in you paying a higher interest rate on your loan or even being disqualified from your loan entirely. Common advice includes making all your bill payments on time, not applying for or cosigning any new loans or lines of credit, not authorizing new credit inquiries, not making any large purchases on credit and not running up large credit card balances. Your loan officer should provide you with complete guidance to help keep your home financing on track.
On the road to becoming a homebuyer, avoiding common mistakes is key to making your experience as smooth and rewarding as possible. By steering clear of these seven pitfalls, you’ll be better equipped to navigate the homebuying process and secure a home that aligns with your dreams and financial goals. Remember, preparation is key – research diligently, enlist expert guidance and stay patient throughout the process. With the right mindset and knowledge, you’ll be well on your way to unlocking the door to your first home.
If you’d like to get preapproved for your home financing, get in touch today!