First Time Buyer Top Mistakes to Avoid
January 17, 2019
Buying your first home comes with many big decisions and can be overwhelming AND exciting. It’s easy to get swept up in the idea of shopping for your first home and could lead to mistakes that can leave you with buyer’s remorse later. If it’s your first rodeo or it’s been many years since you last purchased a home remember, knowledge is power.
Here are some of the most common mistakes first time buyers make and how to steer clear of them:
- Looking at Homes Before you Apply for the Mortgage: In many large markets, housing inventory is tight and competition is fierce. You may miss out on a home, or bid on one that’s over your budget. When you get fully ‘preapproved’ for financing it sends the message that you are a serious buyer and you’ve already done the necessary part of getting preapproved for financing. Your offer will be taken more seriously.
- Working with the Wrong Lender: Do your homework on this one. Be sure you’re working with a direct lender, one that makes their own underwriting decisions. Don’t overlook the lender’s customer service skills and responsiveness either. A great lender will address your questions fully, follow-up on each step of the process, and give you sound advice on how much you can afford realistically. Not just try to put you in the biggest loan you can afford.
- Buying more house than you can afford: This is why pre-approval is so important. If you fall in love with a home that is over your budget, you could become unhappy quickly. Rather than looking for a certain home or price, determine what your most comfortable payment would be. Strive to stay in that range. Remember you will probably buy again in a few years! Also, there are hidden maintenance and replacement costs in owning a home, that you as the owner will need to allow for in your budget.
- Moving Too Fast: Buying a home is complex. You should probably start the process of getting ready at least 6-10 months before you buy. You’ll need time to get any debt and credit issues in order, save for down payment, save for reserves, and review the details of what size home and location you prefer.
- Draining Your Savings: Spending everything you have in savings may not be the best way to structure your purchase transaction. True, with 20% down your payments may be lower, you may avoid mortgage insurance, but taking all of your savings and living on the edge is not the way to go. You may have mishaps with your new home, another emergency with loss of income or long term illness. With no savings left you will get very discouraged during trying times like these that happen to all of us at one time or another in life. Keep an open mind for the lower down payment options available; they work for a majority of today’s first time and repeat homebuyers.
- Being Careless with Credit: Lenders pull your credit history at the beginning and close to the end of your loan transaction. Any new loans or higher balances can possible deter you being able to close on time, and could also affect your approval. Instead refrain from opening any new accounts, increasing the balances on existing accounts, and closing any accounts during your mortgage loan process.
- Fixating on a Specific Home or Making a Decision Based on Emotion: Of course you want a home that meets your needs. Being Nitpicky about a home’s cosmetics can be short-sighted if you wind up in a neighborhood you hate. The goal is to find a place where the culture and values of the area match yours. You can always trade up, add another bathroom or remodel in a few years if necessary. Many buyers today are making a decision about their offer based on the emotion of finding something right away or thinking that home is “perfect” one. They are over bidding because they think they have to. Stick to your budget and don’t become emotionally attached to a home that’s not yours yet.
Purchasing your own home is one of our great American Dreams! Take your time and work with a knowledgeable lender that can help you navigate the way, starting with your No cost Preapproval at Guaranty Trust Mortgage. For more info, contact one of our expert lenders today!