Mistakes First Time Home Buyers Make

Looking to buy your first home? We’ve gathered some common mistakes first time home buyers frequently make. Check out this article to find out how to avoid them.

Do you think you’re ready to buy your first home? Be aware! There are a lot of easily avoidable mistakes first time home buyers make when shopping for a house. Some of them get caught up in the whole process and don’t put enough time into their research. Others overlook additional costs of owning their own home. These mistakes end up affecting the buyers in the long run.

First time home buyers need to develop a long-term perspective on their purchase before signing any papers. They should carefully budget their mortgage payments to make sure they will afford them. Finding a trustworthy and experienced lender will help, but being informed and doing research is also crucial for people considering to purchase a house. Below, you can find some common mistakes first time home buyers make and how to avoid them. 

Not saving for a sizeable down payment

If you don’t have enough money to pay a sizeable down payment you will have to settle for higher interest rates. Even worse, you might have to pay private mortgage insurance, in addition to your monthly mortgage payments. This costly coverage protects your mortgage lender, who is taking a greater risk with a borrower who has less equity.

Not knowing what they can afford

Many first time home buyers spend a lot of time researching homes, but very little time analyzing their financial possibilities. Draw up a mock budget for homeownership to see what kind of monthly mortgage payments you can afford. Keep in mind that lenders qualify buyers based on their incomes and debt-to-income ratios. They don’t consider how much the borrowers spend on transportation, food and other necessities. Your mortgage payments shouldn’t exceed 30 percent of your income.

Not shopping for their mortgage

Finding a mortgage lender will take a lot of time and research. There are thousands of options out there, so make sure you take your time to pick the best one for you. Many first time home buyers believe that picking a fixed-rate mortgage is preferable. However, choosing an adjustable-rate mortgage could mean a lower starting monthly payment. You can always refinance your mortgage later on.

Not getting pre-approved

Getting pre-approved for a loan may require you to pay a fee, but it can also make the difference between getting the house you want or not. Sellers prefer bids from prospective buyers who are already are pre-approved for a loan. This way, they know if an offer is a serious one. If a buyer doesn’t get pre-approved, he may not get as much financing as they had hoped after going through the actual loan application process. Once you get an estimation of how much the bank can loan you, you will also know what types of houses to look for.

Not considering additional costs

A lot of additional costs are easy to overlook during the buying process. Property taxes, insurance and moving fees should also be taken into consideration when budgeting for a home loan. Don’t forget about any repairs or renovations the house might require.

Showing how excited they are about a home

Falling in love with a house is a wonderful, but dangerous feeling. You might end up offering a bid that far exceeds the true worth of the house. If the seller is made aware of your infatuation, he will realize that you might be willing to overpay and take advantage of you.

Skipping the home inspection

Never skip the home inspection, or you might end up paying a lot more than you anticipated on repairs. Bring in a reliable inspector that can check the foundation and structural features of the house, plumbing and electrical system. Make sure he or she will look for mold or pest infestations as well.

Buying your first home can be a challenging process. Make sure you have all the information you need before diving in. Take your time to carefully consider all your options, in order to make an informed decision. Homeownership is a big and life-changing decision, so don’t make the mistake of treating it lightly.