Many first-time homebuyers make mistakes, when finding the home that they absolutely, positively cannot live without. However, they make mistakes, which are costly, when finding that all-important first house. They find that homeownership is expensive and seldom consider the long-term consequences of their actions. Here are the most common errors they make—don’t become a statistic on this list.
Common First-Time Homebuyer Mistakes
Here are the errors that are most common to first-timers.
1. Getting a mortgage loaded with long-term risk.
Adjustable rate mortgages (ARMs) are appropriate, but seldom for first-time homebuyers’ uncertainty in the duration of their ownership time period. The temptation of the lower starting interest rate (as compared to fixed rate) mortgages is often an attraction they cannot resist.
2. Buying more house than they need.
Mortgages evaluate your affordability based on your income and credit history. Young first-timers often believe their careers will improve soon, dramatically increasing their gross monthly income. They tend to become emotional when finding a home they love instead of holding firm to their original affordable price range. If their lender agrees with their vision, it may approve their application.
3. Dismissing the home inspection as unimportant.
A thorough home inspection is vital to a buyer. Otherwise, forgoing a home inspection is incredibly risky. It’s actually much more important than the required appraisal, as serious problems may exist with plumbing, electrical service, and roofs that can cost thousands to repair. Don’t expect sellers to point out these problems; they just want to sell their home as quickly as possible.
4. They often fall in love with the first home they see and neglect to shop around.
First-timers often fail to speak with different lenders, comparing different interest rates and closing costs. They should get multiple (at least 3) estimates, which lenders should reduce to writing for current interest rates and real closing costs with applicable lender fees (which are always negotiable).
5. They often fail to visit a home for sale multiple times.
Features that initially impressed you may not translate to everyday benefits. You’ll learn if your first impressions were valid by visiting homes you consider at least 2-3 times before making an offer to buy. Sure, the home may be scooped up by another buyer, but, so what, there are other choices. Real estate hasty decisions tend to be costly.
6. Restricting your search to the one neighborhood you absolutely want to live in.
There probably other areas that have equally good “ambience and panache,” have equally good school systems, and equally impress your friends and family. Don’t be too restrictive; keep an open mind about locations.
7. Some first-timers prefer to make a home search a do-it-yourself (DIY) project.
This could be the biggest mistake of all. Buyer’s agents realize sellers’ agents only have the sellers as clients, rightfully protecting sellers’ interests (they commit to getting the highest price possible). First-time buyers should find their own agent to protect their interests (finding the right home at the right price in the right area).
You can avoid these common expensive mistakes by avoiding these costly errors. First-timer’s lack of home buying experience will be bolstered by a partner (your agent) with loads of experience protecting and advising buyers.