Common Mistakes First Time Homebuyers Make
Purchasing a home for the first time is a big decision. We want you to feel confident about the entire process before, during and after the transaction for years to come. Here are some common mistakes to avoid when becoming a first-time homeowner.
Mistake 1: Not knowing how much you can afford.
Before buying a home, it's crucial to understand your budget and how much you can afford to spend. A mortgage affordability calculator can help you determine what price range is affordable for you based on your income, expenses, and down payment. But don't forget to factor in additional costs such as property taxes, insurance, and maintenance when determining your budget.
Mistake 2: Not getting pre-approved for a mortgage
Getting pre-approved for a mortgage is a critical step in the home-buying process. It not only helps you understand how much you can borrow but also shows sellers that you're a serious buyer. Without pre-approval, you may end up losing out on your dream home to another buyer who already has it.
Mistake 3: Not shopping around for a mortgage.
The interest rate and terms offered by different lenders can vary greatly. Not shopping around for the best mortgage deal can result in paying significantly more in interest over the life of the loan. For example, if you take out a 30-year mortgage with a 4% interest rate, your monthly payment will be $1,194. However, if you take out the same mortgage with a 4.5% interest rate, your monthly payment will increase to $1,266. This is a difference of $72 per month, or nearly $26,000 over the life of the loan. Consider working with a mortgage broker like Align Mortgage who can help you compare offers from multiple lenders and find the best option for you.
Mistake 4: Failing to negotiate.
Failing to negotiate the price of the home or other terms of the sale can result in paying more than necessary. Negotiating the price, closing date, home warranty, and included appliances can often lead to a lower purchase price and significant savings. Take into account market conditions, the asking price, and any repairs needed when making an offer.
Mistake 5: Skipping the home inspection.
A home inspection is a thorough evaluation of a home's condition performed by a professional inspector. Skipping this step can result in unexpected and costly repairs. A home inspection provides valuable information about the true condition of the home and any repairs needed. In some cases, an inspection may uncover issues not disclosed by the seller and result in renegotiating the price or terms of the sale.
Mistake 6: Making emotional decisions.
Buying a home is a personal finance decision, not just an emotional one. Around every corner is a new memory to be made, and you may already be envisioning your kids playing in the yard or splashing in the tub. While it's easy to get caught up in the excitement of a dream home, it's important to make decisions based on facts and not emotions. Remember, a home is likely the largest financial investment you'll make in your lifetime.
Mistake 7: Ignoring the long-term.
When buying a home, it's important to think beyond the present and consider how your needs may change in the future. Not considering the future, such as the need for more space or the impact of the home's location on your commute, can lead to regret and the need to sell and move again in the near future, which can be time-consuming and expensive.
Mistake 8: Not having a contingency plan.
A contingency plan is a backup plan in case a sale falls through or things don't go as expected. For example, the home may fail inspection or financing may not be secured. Consider including contingencies in your offer, such as the ability to back out of the sale if financing cannot be secured within a certain timeframe or the ability to renegotiate the terms of the sale if the home fails inspection. Having a contingency plan provides peace of mind and protection in case something unexpected occurs.
In conclusion, it's important to do your research, seek advice from experts, and take your time when making such a big decision as buying a home. Connecting with trusted real estate professionals can help you make informed decisions throughout the home buying process based on your specific goals, finances, and situation.