Tips For First-Time Home Buyer: 20 Tips for First-Time Homebuyers on Mistakes to Avoid
Making the decision to buy your first home is extremely exciting. However, it can also be overwhelming for first-time homebuyers if you don’t know what mistakes to look out for. Here are 20 tips to help you avoid common pitfalls when purchasing your first house.
Tips For First-Time Home Buyer: Getting Pre-Approved
Before you start looking at houses, make sure you get pre-approved for a mortgage. This means sitting down with a lender and getting a letter that states how much the bank is willing to lend you.
* Failing to get pre-approved can cost you in multiple ways. First, you may look at homes completely out of your price range. Second, sellers won’t take your offers seriously without a pre-approval letter.
* Don’t assume you can borrow more just because you got approved for a certain amount. Stick to a price you can truly afford based on your income, expenses, and savings.
Tips For First-Time Home Buyer: Choosing the Wrong Neighborhood
It’s important not to get swept up in the excitement of buying your first home and end up in the wrong area. Consider things like:
* Commute times to your workplace as well as your lifestyle and interests outside work. Is the neighborhood too far or too inconvenient?
* Safety levels and crime rates. Is it riskier than you feel comfortable with?
* Noise levels from traffic or other neighbors. Can you see yourself living there happily despite noises?
* Future development plans. Is it going to be renovated or commercialized?
Tips For First-Time Home Buyer: Not Doing Thorough Research
You should thoroughly research any home you’re interested in to avoid surprises after moving in. Look into things like:
* Any permits pulled for renovations or additions to see if work was aboveboard.
* Neighborhood nuisances that may impact livability or resale value.
* Property lines and easements that could limit what you can do.
Not researching these items comes back to haunt many first-time buyers.
Tips For First-Time Home Buyer: Waiving the Inspection
Especially in competitive markets, you may feel tempted to waive the inspection contingency to make your offer stronger. But this is too risky as a first-time buyer.
* You likely don’t have the experience to gauge issues just by looking at the property. Pay for the inspection.
* If faced with competing offers, show sellers proof you are approved and capable of covering appraisal gaps or other issues that pop up.
Tips For First-Time Home Buyer: Not Being Objective About Issues
When you finally find a home you love, it’s easy to downplay or ignore problems uncovered in the inspection report. But this sets you up for nasty surprises when issues get worse or more problems crop up.
* Don’t dismiss issues just because you don’t want to lose the home or delay closing. Factor repair costs into negotiations.
* If issues are too costly to address, be ready to walk away no matter how much you love the home. More great options will come around.
Tips For First-Time Home Buyer: Getting Swept Up in Bidding Wars
Bidding wars are intense. When your heart is set on a particular home, you can get caught up in bidding over asking price or waiving contingencies.
* Don’t let desperation over one property drive you to overpay significantly or ignore warning signs.
* Set a maximum bid based on comps and stick to it, even if it means losing out.
Tips For First-Time Home Buyer: Not Budgeting for Closing Costs
When you’re approved for a mortgage, focus your budget on the monthly payments. But don’t underestimate closing costs, which include:
* Origination charges and discount points to get your interest rate
* Appraisal and inspection fees
* Title searches, insurance, escrow, and recording fees
* Initial tax and insurance payments into your escrow account
Save every dollar possible for these fees so you don’t end up short at closing.
Tips For First-Time Home Buyer: Being Inflexible About Move-in Timelines
When buying your first home around the same time as selling another property or ending a lease, build plenty of buffer into your move-in timelines.
* Delays commonly happen due to inspection negotiations, appraisal issues, or title problems.
* Line up temporary housing in case you need somewhere to stay between properties closing.
* Avoid scheduling movers until several days after closing just in case.
Tips For First-Time Home Buyer: Paying Too Much Attention to Decor
While you want a home with a style you enjoy, don’t get distracted by décor that overwhelms more critical factors like layout or structural condition.
* Cosmetic changes like paint color, flooring, or countertops can easily be altered. Focus first on bones/foundation.
* Similarly, seek solid construction versus fancy finishes that add cost but little value. Add finishes over time.
Tips For First-Time Home Buyer: Not Planning Renovations
It’s tempting to buy a fixer-upper home thinking you’ll renovate it slowly over time. But this rarely works out well. Instead:
* Create a detailed rehab budget before making an offer on any property needing major upgrades.
* Build enough savings to fund renovations quickly so the home becomes livable and enjoyable faster.
* Focus initial renovations on urgent repairs or fundamental layout/structural changes. Hold off on cosmetics.
Tips For First-Time Home Buyer: Waiving Contingencies
Lenders require appraisals to ensure the property is worth the loan amount. Home inspections also safeguard your investment against hidden issues.
* Never waive contingencies without fully understanding the risks first as a buyer.
* If faced with a competing offer without contingencies, find other ways to make your terms appealing like escalation clauses.
Tips For First-Time Home Buyer: Not Checking Schools
Here is another common first-timer mistake – falling in love with a home without researching local schools.
* School quality impacts resale value and your ability to grow into the home as your family expands.
* Drive by schools and research online about test scores, ratings, resources, size, demographics, and so on.
Tips For First-Time Home Buyer: Skimping on Insurance
All mortgage lenders require home insurance. But new buyers often pay for the cheapest policy quoted. This leads to unpleasant shocks later.
* Work with an independent insurance broker to review various quote options and limits.
* Choose enough dwelling and loss of use coverage to fully rebuild your home.
* Select endorsement add-ons tailored to risks in your area like floods or earthquakes.
Tips For First-Time Home Buyer: Being Inflexible in Negotiations
Remember that purchasing a home typically requires give-and-take. Avoid locking yourself into a single strategy.
* Be ready to negotiate on your offer price, closing date, included fixtures, or repairs.
* Also prepare to take concessions based on the appraisal or inspection findings.
Staying stubborn could cost you that dream home.
Tips For First-Time Home Buyer: Rushing the Process
It’s easy to rush when you finally find the perfect home. But proceed calmly and avoid pressuring your real estate agent, lender, or the transaction.
* Respond promptly to requests for paperwork but set realistic timelines all parties can meet.
* Be clear about your “must-haves” on timeline and terms but compromise on less critical aspects if needed.
Tips For First-Time Home Buyer: Getting Emotionally Attached
Finally, try to avoid getting emotionally attached to any particular home, especially early in your search process.
* Remind yourself other great options will come up if any deal happens to fall through.
* Look at this as a business transaction centered around an asset meeting your needs, rather than an emotional purchase.
Stay objective and you’ll avoid heartbreak while finding your perfect starter home.
Best of luck on your first home purchase! Feel free to reach out with any other questions.
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