Are you about to buy your first home? If so, congratulations! This is an exciting time. We’ve been in the business long enough to know that first-time home buyers sometimes make mistakes that cause the entire experience to sour. We’ll help you keep things sweet by pointing out these common first-time home buyer mistakes.
1. Not Knowing What You Can Afford
First things first. What the lender says you can afford per month and what you’re actually comfortable paying are two different things. So, how do you figure this out and avoid one of the most common first-time home buyer mistakes?
If you don’t already have a budget, make a list of all your monthly expenses (excluding rent, which you won’t be paying after you buy a home).
Make sure to account for the true cost of owning a home, which includes more than just a mortgage payment. These things include (see item #3 for more information):
- Lawn care
- Maintenance and repairs
- HOA fees
We’ve seen it happen time and time again. If you look at homes that are outside of your price range, you’re sure to fall in love with something you really can’t afford. This is bad for two reasons: you may try to stretch your finances more than you should, and you may feel unhappy with what you actually can afford. It’s better to just not go there.
2. Skipping Pre-Approval
It’s so important to do a full pre-approval before you even start looking at homes. This is when you submit all kinds of documentation to the lender (including pay stubs and bank statements). They look at these documents and your credit score to calculate how much they are able to lend you.
If you do this before you ever look at homes, 1) you won’t look at homes the lender says you can’t afford, and 2) you won’t waste anybody’s time by signing a purchase contract only to discover later that you can’t get the loan you want.
It’s important to note that pre-approvals are not commitments to lend. If your credit score changes or you suddenly take on a lot of new debt, your loan can still go south. But a pre-approval makes your offer much stronger in sellers’ eyes, especially in extremely competitive markets like ours.
3. Not Knowing the True Cost of Owning a Home
We mentioned this above, and it’s worth mentioning again. One of the worst first-time home buyer mistakes is not knowing what it really costs to own a home. It’s not as simple as just writing a rent check every month.
Unexpected things can and will come up when you’re a homeowner. Your furnace might die, you might find mold in your bathroom, or you might find a leak in your roof. These are all things that will get worse unless you deal with them, so part of being a homeowner is making sure you have the resources to do so. Many suggest saving 1% of your home’s value each year, though remember—some years you’ll spend much more and some years you’ll spend less. The amount you should save varies depending on your home’s age, condition, and size.
Maintenance, on the other hand, is much more predictable and easy to budget for. You can anticipate things like air conditioning and heater tune ups or chimney cleanings. You can also easily budget for things like replacing furnace and AC filters.
If you’re going to buy a house that needs renovating, know about the costs of renovating that home before you buy. You may find that what you want to do is too expensive.
If you’ve been living in a two-bedroom apartment, you’re going to find that your monthly utilities will jump if you buy, say, a four-bedroom home. You can call utility companies and ask for a 12-month average on the home to give you an idea of what you’re going to be paying.
4. Not Thinking About Current and Future Needs
It’s a mistake to go into home shopping without knowing what your needs are. Make a list of everything you want in a home, and categorize those items according to needs and wants. Have your spouse, partner, or whoever is buying a home with you do it, too. Then decide together what you absolutely have to have in a home.
When you’re done with that, use the same method to think about your future needs. If you’re planning on having kids or becoming empty nesters in the near future, you may want to buy an entirely different kind of home.
Also, consider what changes may come up in your potential neighborhood. If a new highway is going to be built very close to your home, the entire dynamic of the neighborhood will change, possibly making it somewhere you don’t really want to be. Or other development projects may be in the works that would change the neighborhood for better or for worse. It’s worth taking a little time to do the research and compare your findings to your needs, both now and in the future.
5. Being Too Picky
It’s easy to get caught up in the dreaminess of buying a home, especially when you haven’t purchased one before. But then reality can set in, and you may realize that what you want isn’t on the market or isn’t available at your price point.
First, don’t get too caught up on things like paint color or flooring. These things are easily (and not too expensively) changed once you actually own the home. They may look really ugly now, but they shouldn’t be a deal breaker.
And never underestimate what a good cleaning and your own décor can do for a place. You’ll love making your new home your own, even if it isn’t exactly what you always pictured in your dreams.
6. Compromising on the Important Things
Don’t, however, compromise on the most important things. If you know one bathroom or two bedrooms isn’t going to work for you long-term, don’t buy that house! If you have to make major compromises to buy a home, you’re better off continuing to rent for a while.
If you know you don’t want to share walls with neighbors, don’t buy a condo. If you have to have a yard for your dog, make sure you have a yard! This is when your list of must-haves comes in handy.
7. Not Hiring a Great Agent
We might be a little biased, but it’s critically important to hire a great real estate agent when you’re looking for a home.
A good agent will be in constant contact with you about new homes as they pop up on the market. He or she will help you figure out where to take your home search next.
A great agent will also go up to bat for you, negotiating to get you the best deal possible and watching out for your interests. And by the way, we’re legally bound to represent your best interests.
Also, make sure you get an agent who is an expert in your area. They’ll have the inside scoop and connections to help you find the kind of home you’re looking for in just the right area.
8. Not Getting an Inspection
We always strongly, strongly encourage people to get an inspection. Before you sign those documents that make the home yours, you need to know what you’re actually buying. A home can look great to the naked eye but have tons of problems that will cost you a lot of money to fix.
Don’t get too emotionally attached to the home until it’s been inspected and you know exactly what its physical problems are.
Don’t Make First-Time Home Buyer Mistakes
Do you have any questions about making a smart first-time home purchase? We’re here to help you every step of the way. And we’ll do everything we can to help you not make these common first-time home buyer mistakes.