8 Easily Avoidable Mistakes First-Time Homebuyers Make
These common mistakes can turn your dream home into a living nightmare.
Buying a home for the first time is an exciting milestone, but one that could easily turn your life upside down—and not in a good way. So many first-time homebuyers end up making mistakes that have lifelong repercussions, so it’s important that you try to do everything the right way.
Buying a home for the first time guide
Here are just some of the most common mistakes first-time homebuyers make.
1. Not looking for a loan first
Some people go home searching first before they approach lenders, which is putting the horse before the cart. Not the brightest idea, to say the least.
Even though searching for a new home may seem more appealing than looking for a lender, by establishing just how much you can afford from the very beginning, you’ll be avoiding a lot of the mistakes here on this list.
2. Not shopping around for a good lender
Your lender or bank makes a huge difference in how you’re going to pay for your new home, which is why you shouldn’t just settle for the first thing that comes your way. Shop around and compare their interest rates and closing costs so that you know you’re getting the best deal.
3. Using up your life savings for the down-payment
Many first-time homebuyers make the mistake of using up their entire savings for the down payment just because they don’t want to pay for mortgage insurance. Though you might be saving on your monthly mortgage payment, it’s just not worth it to have no safety net.
4. Underestimating the cost
Even though you can technically afford to make your mortgage payments, have you taken into account all your other expenses? Calculate just how much you spend every month and see how much you can actually afford to funnel into your home payments before setting a budget.
Plus, you have to consider the additional costs that come with owning property: taxes, insurance, maintenance costs, repairs… the list goes on and on, which is precisely why you should give yourself some wiggle room.
5. Not hiring a real estate agent
First-time buyers might think that hiring a real estate agent is a waste of money, but you could potentially be saving yourself a considerable amount of money. If you don’t hire an agent, you’ll just be dealing with the seller’s agent, who will naturally put the seller’s needs first.
A good agent will help you find the best property in your price range. They’ll negotiate on your behalf, and will handle your paperwork. Because you’re buying for the first time, you’re going to need all the guidance you can get.
6. Having unrealistic expectations
If you have a vision of your home that you just won’t let go of, that could really complicate things, especially when you’re on a tight budget. Do you really need that extra bedroom? Is that horrendous wallpaper in the living room really all it takes to make you turn around and go, “nope”? If your funds are limited, you’re going to have to make a few compromises.
7. Looking at homes you can’t afford
You already set a budget, so why look at more expensive homes? This can make you unhappy with the homes that you can afford, or might compel you to stretch your budget and pay more than you’re actually capable. In other words, this can quickly lead to disaster.
8. Following your heart
When finances are involved, making decisions based on your emotions is a terrible idea, but first-time homebuyers are especially susceptible to this. You might feel like you just can’t let go of this home that’s just outside your budget, but wait until the bills start piling up and those warm fuzzy feelings are replaced with serious buyer’s remorse.