Buying your first home is a huge milestone — and an exciting one! But it can also feel daunting at times. You have lots of decisions to make, and most of them have significant financial implications for your future. How do you know you’re on the right track? What can you do to prepare? And what are the things you definitely should not do?
In this article, we’ll answer those questions and more by covering 7 of the most common first time homebuyer mistakes (and what you should do to avoid them).
- Talk to multiple mortgage lenders to shop around for the best rate.
- Begin planning and budgeting for a new home several months to a year before beginning the buying process.
- Consider additional costs that come with home ownership, like utilities, repairs, and upkeep.
- Never skip the home inspection.
- Research potential locations as much as you research actual homes.
- Take advantage of first-time homebuyer programs in your city and/or state.
7 First Time Home Buyer Mistakes to Avoid
Not Shopping Around for a Mortgage
It’s tempting to go with the first lender who offers you a mortgage loan. After all, you’re ready to get to your actual home search! But only talking to a single lender can mean you end up leaving money on the table. Instead, reach out to at least three mortgage lenders and compare their rates.
Buying More Home Than You Can Afford
A common trap new homebuyers fall into is getting attached to the maximum loan amount they qualify for. But that number doesn’t take into account other life expenses, and it’s important to instead focus on a monthly payment amount you can comfortably afford.
When you think about your home budget, consider your entire financial situation: other debt, living expenses, and things like vacations or social activities that you enjoy spending money on.
That more expensive house may seem like a good idea, but it won’t be fun when it’s the only thing you can afford to pay for!
Rushing the Process
Buying a home takes time and planning. It’s a good idea to begin planning your home buying timeline several months to a year in advance. Do a personal credit check and evaluate your savings situation to determine potential down payment and mortgage interest rates. Use a free calculator (like the one from Zillow pictured below) to estimate monthly mortgage payments.
Once you begin looking at houses, don’t rush to purchase the first one you like. While in some cases buyers do choose the first or second home they see, it’s important to be sure about your decision rather than feeling rushed into it.
In a competitive market like today’s, it’s also easy to feel pressured to put an offer in quickly to secure a home. But it’s also a mistake. For first time home buyers, this is likely the largest financial investment you’ve ever made. Settling for a home you don’t love will only leave you feeling regretful later on.
Instead, know your priorities — including your wants vs. needs for your home. Evaluate each home based on your unique list. Most of all, trust your gut. If you feel like you have reservations about a home, keep looking.
Not Considering All the Costs of Homeownership
Homebuyers spend a lot of time budgeting for a down payment, mortgage payments, and costs directly associated with the purchase process. But they aren’t the only ones to consider. Owning a home comes with other expenses like utilities, repairs, furnishing, and general upkeep.
Take time to map out your budget and know how much you’ll be left with after your mortgage and other existing bills. Then, make sure you’re confident you can afford the expenses you’ll be adding related to your new home.
Not Knowing Your Location
We’ve all heard it before — location, location, location! But in a world where buyers can search the internet to look at homes, it’s easy to get attached to a home you love without considering the surrounding community. But failing to do so could lead to discontent down the road.
Ask yourself questions like:
- What characteristics are you looking for in a neighborhood?
- Do you need access to highways?
- How far will you be from family and friends?
- How far will your commute be to work?
- What is your proximity to your neighbors?
- What is there to do in your neighborhood?
During the home buying process, identifying preferred locations can also help you narrow your search and make a confident final decision on a home. That said, it’s okay to look at homes in unfamiliar neighborhoods, too, as long as you do your research.
Skipping the Inspection
Never pass on the home inspection before you buy. Especially when there are several offers on a home, people sometimes offer to skip the inspection in order to make them a more attractive buyer. But a seller that suggests skipping the inspection is a big red flag. The risk is just not worth the potential reward of securing that home. Instead, move on and find a home you can be sure has no hidden costs or issues.
Ignoring First-time Homebuyer Programs
Many states, cities, and other municipalities offer first-time homebuyer programs to incentivize people to buy there. These programs offer down payment assistance, tax credits, credit flexibility, special rates, and other forms of support to help young and first-time home buyers afford a new home.
Here are some options for first time homebuyers here in Ohio:
You’re only a first time homebuyer once, so don’t miss out on the opportunity to save. Check out the programs available near you!
Moving to Dayton? Let Oberer Homes help you find (or build!) a home you’ll love. Contact us to get started.
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