Pitfalls First-Time Buyers Should Avoid
The home-buying process can be complicated and stressful, and especially intimidating for first-time homebuyers. There is a lot of thinking and planning ahead involved in the process of buying real estate that some people might not realize.
Not Knowing Your Financial Situation
Something important that you will want to make sure you’re aware of as a home buyer is your credit score. In most situations, a credit score of at least 620 is needed to qualify for a mortgage. A lot of sellers will want any buyers who see their home to be pre-qualified before a showing takes place. If your credit score is high, there’s a chance you may be qualified for a large mortgage.
Before you choose to go with that large mortgage, make sure the monthly payments are something you can afford. Many first-time homebuyers will get caught up in the excitement of buying their first home and take the large mortgage because they qualify for it, then later find that it’s too much for them to handle.
Not Planning Ahead
Homebuyers should always know that the process takes commitment. On average, it takes 16 weeks for buyers to find the house they love. Since a lot of first-time buyers are not familiar with the process, they don’t commit themselves for more than a few weeks and as a result lose open-mindedness. Choosing a home is a huge decision that requires a lot of planning and commitment.
Choosing the First Home You See
With lack of commitment comes another common mistake made by first-time homebuyers -not being picky enough about the homes that they’re being shown. The way a home looks is very important, but even more important than that is making sure it has the features you need inside and that it will function the way you need it to.
Timing the Buy Poorly
If you’re in a rental agreement, it’s important to plan ahead and check the terms of the agreement with your landlord. It’s not a good idea to start looking at homes until the rental agreement is near the end because sellers will not wait for buyers that still have several months left of their rental agreements. A lot of landlords will require a month and half of rent to break the rental agreement early, and in most cases, the security deposit will not be returned. If you’re thinking about buying a home, it is best to clarify these things with your landlord so you are prepared if you find a home quickly.
Not Saving for Related Expenses
When figuring out finances as a first-time homebuyer, there are some things that are often never thought about. Aside from the costs of buying the home and hiring a realtor, there are several other costs, such as a down payment, home inspection, insurance and taxes, moving costs, 2-6 month reserves, and closing costs. As far as a down payment is concerned, more money is always better. This way, your monthly mortgage payments will be decreased.
Skipping the Inspection
A lot of buyers will skip the home inspection as to save money. This will actually cost you more in the long run depending on what you find wrong with your home after buying it and moving in. The majority of all homebuyers do have a home inspection prior to the purchase of their home. This is a much safer and more cost-efficient route, even though it may not appear that way at first.
Making Decisions Based on Emotion
Just like with buying your first car when you’re 16 or 17, or getting your first apartment at 20 or 21, buying your first home is a very exciting life event. However, it is important to remember to not let your excitement make your decisions. Certain situations happen where a closing will fall through, or a seller will change their mind and take the property off the market. For this reason, it’s best to not become attached to a home until you have the keys in your hand.
Buying Without an Agent
Choosing a realtor to guide you through the home-buying process should be something that takes some time and research. Not all realtors are alike, and a realtor should not be chosen based on the fact that you may think they are all the same.
It’s very important to take time to interview realtors thoroughly; as a buyer you will want to be confident that you are hiring someone who is actively looking for the best home for your needs. If you’ve personally been referred to a realtor, consider this as one of your best options. A little over 40% of homebuyers end up choosing a realtor that they were personally referred to.
Not Communicating With Your Team
While it’s important to choose a realtor that will be available to answer any questions you may have, it is equally as important for you, the buyer, to be as easily available. The team of people guiding you through this process, including your realtor and your lender, are there to help you and will often have to contact you regarding listings they may find for you or financial questions.
The easiest way to make sure you go through the home-buying process as a first-time buyer smoothly and as stress-free as possible is simply to make sure you’re informed and patient. The process can be complicated, but if you are realistic about everything and plan ahead, it will be no time at all before you move in to your first home.