Top Things to Avoid
Tired of renting? Ready to dive head first into the world of home ownership? That’s great! Owning a home is one of the biggest investments most of us will make so it’s important to be prepared. Here we will examine ten of the most common mistakes first time homeowners make and we’ll show you how to buy like a pro.
1) Not checking your credit report and score
You’ve started browsing the online listings and begun adding items to your wish list but before you think about stepping foot in an open house make sure that you’ve got a current copy of your credit report. The cleaner your credit report and higher your credit score, the more likely it is that you’ll be pre-approved for a mortgage at a low interest rate.
It’s recommended that you review your credit report and score a couple of months in advance to your house hunt to ensure that the facts are correct. This will give you plenty of time if adjustments need to be made before meeting with a mortgage lender. Sites like Annual Credit Report allow you to access a free copy of your credit report once every 12 months.
2) Skipping the pre-approval process
When beginning the home buying process, it’s tempting to skip all the boring items and head straight for the listings. However, it’s important to know what you can afford to spend on a home which is why it’s a good idea to get pre-approved by a reputable mortgage lender before starting your search.
A pre-approval is a formal analysis of your financial state based on factors like credit score, income, etc. As mentioned in the previous step, a high credit score and clean credit report will help your chances of getting pre-approved. Once the process is complete you’ll receive a pre-approval letter. This is a breakdown of your finances and tells you how much you can afford to spend on your home.
Although looking at homes and fantasizing about the future is exciting, it’s best to know what you can afford. After all, what good is a home that you can’t afford to live in?
3) Forgetting additional expenses
It’s important to remember that there are more expenses that go into home buying than just the down payment and monthly mortgage. Another common mistake that first time buyers make is not knowing or forgetting the additional expenses.
What once was covered by a landlord is now your responsibility. Insurance, appliances, furniture, maintenance and utilities are just some of the additional expenses new home buyers can expect.
4) Choosing an agent or lender you aren't comfortable with
When your finances are in order, it’s time to start your realtor search. Don’t settle on the first agent that comes up in your web search results. Ask friends and family for referrals. Meet with perspective agents until you find one that you are completely comfortable with.
First time home buyers can be more time consuming and often require more attention than the average buyer. Good real estate agents are accommodating and friendly, will show only the homes that fit your specifications and help with strategies during the bidding process. Good real estate agents will never pressure you into something that you are uncomfortable with.
Similarly, you should have total confidence in your mortgage lender. It is crucial to fully discuss and understand your financing options with a lender. It’s important for you to understand what you’re getting into so if you have questions, ask.
5) Thinking you'll get everything on your wish list
Every buyer has an idea in their mind of their dream home. Unfortunately, a common mistake of first time buyers is not being willing to compromise on their wish list. It is a good idea to sit down with your realtor and come up with a needs/wants list.
Your “must haves” or deal breakers are items like location, square footage, access to transportation, etc. Your wants are going to be items you wish to have like a garage, updated kitchen, or an extra half bath. A certain amount of flexibility when it comes to the parameters of your home is essential. Your goal is to afford everything on your needs list and some of the items on your want list, all while keeping your long-term budget in mind.
6) Not hiring a pofessional inspector
So you’ve found your dream home and you’re ready to get settled in? Before you move in, it is important to conduct a home inspection. Skipping the home inspection or hiring someone who is unqualified to conduct it could lead to some major and costly issues down the road.
During this process, the inspector checks the structure, roof, attic, etc. to guarantee your home is move in ready.
It is crucial that you are aware of the state of your home before you move in. If the inspector finds something troubling, there is an opportunity to go back and revisit the selling price. Meet with the seller and seller’s agent to ensure you are getting a fair deal for your home.
7) Not researching your neighborhood
“Location, location, location.” We hear this all the time. You may have found your dream home, but if you aren’t in a good location, it can quickly turn into a nightmare. When looking for your perfect home it’s crucial to consider what it’s surrounded by. If you have or are planning to have a family, looking into things like nearby parks and school districts are good ideas. It is the buyers’ responsibility to research local crime reports, school districts, shopping, churches, etc. to find a house and community that is best for them. After all, you can make changes to your house but you can’t change your neighborhood.
8) Not planning for closing costs
As mentioned in previous steps, there are multiple factors besides the down payment that should be considered. On top of additional costs like taxes and insurance, buyers should also remember to save for closing costs.
Closing costs are the fees charged by lenders for services that must be performed in order to close your home, like the appraisal, title insurance, homeowners insurance, etc.
9) Not considering the resale value of your home
You’ve just begun your home buying process, the last thing on your mind is putting a home on the market. Besides, maybe you are planning on this home being your forever home. However, it’s good to remember that life is full of surprises; situations and circumstances can change.
If and when the time comes for you to sell your home, will it be a difficult or easy sale? Keep in mind tastes and preferences of typical home buyers on your house hunt.
10) Be prepared
Buying your first home is a huge milestone. After all, a home is usually the biggest investment most of us will make in our lifetime so it’s easy to see how it could be overwhelming. However, armed with the right resources you’ll be able to avoid common first time buyer mistakes.
Now that you’re aware of these common mistakes, you are on your way to buying like a pro! When you’re ready to start your home search, contact a real estate agent to discuss your goals for home ownership.