To err is human. If you’re about to embark on homeownership for the first time, it should go without saying, that you are about to make A LOT of mistakes. The truth is: the buying process can be overwhelming, confusing, and (sometimes) just plain not fun. But, trust us, learning about some of the mistakes first time homebuyers make, and then, making the effort not to repeat those mistakes will make this process so so so much more enjoyable!
Take a look at some of the most common (and frustrating) first time homebuyer mistakes you don’t have to make:
Shopping for homes before you know how much home you can afford
Once you make the decision to buy your first home, browsing properties is probably the most exciting step of the home buying process – way more fun that figuring out those dreaded finances. However, you could end up wasting a lot of time looking at or visiting homes you can’t afford. Instead, begin the home buying process by shopping for a mortgage. That way, when your dream home comes on the market, you will be ready to act.
Not looking finding the right loan for you
A lot of first time homebuyers want or need to make smaller down payments. And there are a number of loan programs available that allow you to do exactly that. Make sure you familiarize yourself with all first time home buyer programs, as well as loan programs like VA Loans, USDA Loans, and FHA Loans.
Starting Your Home Search Online
Often times, home search engines like Zillow or Realtor.com do not display accurate information. In a fast-moving market, starting your home search online could slow down your process, or even prevent you from seeing a property. Real estate agents not only have the most up-to-date info on homes listed but sometimes, the inside scoop on properties that are not even on the market. Because agents network and communicate with each other, yours may be able to find leads on homes yet to be listed.
Making Too Small of a Down Payment
While you are most likely aware that the 20% down payment is not always necessary, putting down too little money can also be a mistake. A survey by NerdWallet found that 1 in 9 first time homebuyers, under the age of 35, regret not waiting until they had a bigger down payment. It is important not to drain your savings in order to make a down payment. However, a larger down payment can allow for a more affordable monthly house payment. Make sure that you’re comfortable with BOTH numbers before you commit.
Opening a New Line of Credit or Making a Major Purchase Before Your Home Sale Is Final
One of the most important times in the home buying process is the time between the day you apply for your mortgage and the day you close on your home. During this time you want to leave your credit alone as much as possible. Because the lender will base the decision of your loan on your debt-to-income ratio and credit score, applying for a car loan or credit card, or making a large purchase on credit can jeopardize your chance of getting a loan.
Being Too Emotional
Buying your house should be an exciting time, but remember this is a financial decision. First time homebuyers can often get carried away looking for their dream home and wind up spending too much money OR overlooking houses waiting for one that checks their every wish. Stick with your budget. If a house puts too much strain on your finances, it’s important to walk away and find one that better fits your price range. But on the flipside, don’t waste time trying to find a unicorn. The probability of finding a home that fulfills every item on your wish list while remaining in budget is actually pretty low. Know what your priorates are and be willing to negotiate.
The biggest thing to remember: buying your first home is a learning process and mistakes are inevitable. Educating yourself on the process and working with professionals you trust is key. If this seems like a lot to take on, just remember every homeowner has gone through the same process (some of them without the help of the internet). You’ve got this!
For more info, check out our first time homebuyer site: http://ownyourdream.me/