9 First-Time Home Buyer Mistakes And How To Avoid Them
Buying your first home is an exciting and important milestone in your life. It’s probably the most expensive purchase you’ll ever make, and one that will carry you through other important life events through the years.
But amongst all the excitement, hustle, and bustle, there are some first-time home buyer mistakes you need to avoid.
These home-buying mistakes are easy to prevent when you know what to watch out for. We’re here to help. With this insightful guide to the top nine first-time home buyer mistakes and how to avoid them, you’ll be prepared for a successful home purchase.
9 Most Common First-Time Home Buyer Mistakes
A first-time home purchase is a momentous occasion. Keep a level head, and don’t make the following mistakes when buying a home.
1. Not Getting A Mortgage Pre-Approval
One of the most common first-time home buyer mistakes is not getting pre-approved for a mortgage or home loan. Few first-time home buyers get clarity about potential financing until they’re already actively searching for a property.
You can’t commit to something until you know what financing you qualify for. It’s not only irresponsible but can lead to frustration and disappointment if things don’t work out as expected. When you already know what you can spend on a new home, you’re better equipped to find the ideal property.
Solution: Get Pre-Approved
Consult a homebuying checklist before starting the search for your new home. This will give you an idea of what you’re looking for, and how much financing you’ll need to achieve it. Then consult various mortgage brokers and loan officers and get pre-approved for the amount you need.
2. Settling For First Mortgage Rates Quoted
Another of the first-time home buyer mistakes related to mortgages and loans is settling for the first rates quoted.
There are different types of mortgages and home loans, and when you settle for the first one, you’re doing yourself a disservice. Don’t forget that with a typical mortgage, the property is the collateral. If you default on payment, you could lose the house you’ve worked so hard to get.
Solution: Shop Around For A Good Deal
Do you settle for the very first deal on any other big purchases? Probably not. So, don’t do it with the biggest purchase of your life. Shop around for a good deal. If you can’t get pre-approved for a mortgage, consider taking out another type of loan.
3. Being Dishonest On Your Mortgage Application
The last of the home-buying mistakes related to mortgages revolves around honesty. Or rather, the lack thereof. It can be tempting to be dishonest on your mortgage application to get a more favorable result but don’t do it.
It is a type of fraud and can cause some serious ramifications. If you intentionally make false statements, misrepresent your financial status, or omit relevant facts, you will be guilty of mortgage fraud. This is a federal crime.
If discovered, you may be required to repay the loan with immediate effect or face legal consequences. Should you be unable to repay monies borrowed, the lender will foreclose the property. You’ll lose your home and sully your reputation.
Solution: Stick To The Facts
Stick to the facts when filling out a mortgage application. Don’t leave anything out, don’t change details to look like a better prospect for a loan. These discrepancies will be investigated, and your dream of owning a home will be in tatters.
4. Overstretching Finances
It’s common for people to look at properties outside of their budget. Often, it starts innocently, born from a curious desire to see how others live. But this is not about others, it’s about you. Your first home needs to be one that you can afford.
Unless you are a billionaire heir to a fortune, you’ll be working to a budget. Almost everyone has to work within the constraints of a budget. This is especially true if you don’t qualify for a traditional mortgage and have to rely on your savings plus a personal loan of some kind.
Solution: Calculate And Stick To Your Budget
It’s not just the upfront cost of your home, but also the closing costs, taxes, homeowners insurance, maintenance, and repairs that you need to consider. So, be honest with yourself about what you can afford, both now and in the long run.
Do the calculations, and once you’ve come up with a figure, stick to it. If the purchase and maintenance of a large, sprawling estate is outside of your financial means, consider condo living instead.
5. Skipping The Home Inspection
One of the first-time home buyer mistakes that apply to both parties—the seller and buyer—is skipping the inspection. Although sellers aren’t legally required to get their homes inspected before selling, most do if they want to have a speedy sale. But some don’t.
This is often a sign that there’s something to hide: flaws with the property that would deter you from buying.
Solution: Set Up A Home Inspection
If the property you’re looking at has not been thoroughly inspected for problems, ask the seller if you can set up an inspection yourself. If you find any issues, negotiate with them about repairs on condition of your purchase.
Whether you’re looking at a house or a condo, an inspection checklist will give you some much-needed direction during your walkthrough, and any subsequent inspections.
6. Ignoring The Neighborhood Clues
Ignoring neighborhood clues can cause you lots of heartache down the line. We all expect to live in the best neighborhoods, but sadly, some are better than others. Issues like crime, drug use, and other social factors may lurk behind the trees. And you’ll only know about them once you’ve moved in.
Solution: Research The Area
When asked for condo living tips, we always recommend making good use of the amenities on offer and connecting with neighbors. But let’s face it, there are some neighborhoods where that is ill-advised.
Before committing to a purchase, research the area you are planning to move to. Speak to locals about what living there is like. Check the crime stats. If you’re not comfortable with what you see and hear, start looking for a home in another neighborhood.
7. Not Thinking Long-Term
First-time home buyer mistakes are often caused by ignorance. However, this one refers to neglecting to think long-term. It’s not always intentional. Our lives don’t always go according to plan.
When buying a home for the first time, you must consider all possibilities that may affect your choice of property in the future.
Solution: Consider Future Plans And Possibilities
If you’re currently unmarried, or a newlywed, you may decide to start a family. Or you may start a family sooner than you expected. These things happen, but you don’t have to be unprepared. Ensure that the property you buy has room for a growing family or space to add rooms later.
8. Forgetting About Resale Value
This is one of those first-time home buyer mistakes that doesn’t get discussed nearly enough. Although some people buy a home and live there for life, it’s less common these days. Life can be unpredictable, and you may find yourself selling and buying again a few years from now.
If you buy a ‘fixer-upper’ in a less-than-desirable neighborhood, it may seem like a fun project – now. But when you try to sell it, you’ll struggle to do so. And it might not even cover what you spent thus far, never mind making a profit.
That’s what makes this mistake so dangerous; it can cost you time and money you no longer have.
Solution: Buy With Selling In Mind
Buy with selling in mind. What do we mean by this? Consider what would happen if you suddenly had to relocate for a job, or experienced financial difficulty. Your next step would be to sell your home. Now, think about how likely it is that you’d find a buyer in a hurry.
Some properties are easier to sell than others. That’s what makes them good investments, and a safety net for those unexpected future events. If you’re unsure of the type of property that will retain a good resale value, speak to an experienced estate agent. And that brings us to our last point.
9. Picking The First Real Estate Agent You Find
A real estate agent or buyers’ agent can be a great help to you in your search for your first home purchase. They understand the property market and all the admin and legal requirements that go with it. But once again, don’t automatically go for the first option you come across.
Solution: Get An Agent With The Expertise You Need
Hire an agent with the expertise that you need. This means choosing an agent or agency that specifically deals with the type of property you are looking for, or focuses on the area you’re interested in. They’ll be the most able to help you narrow down your choices.
The Bottom Line
Making mistakes when buying a home is easy, but you can just as easily avoid them. Usually, it comes down to more research and planning. But it also requires a healthy dose of realism and honesty about your budget, your current needs, and your plans for the future.
You can avoid many first-time home buyer mistakes with the right help. Looking for your first home in the Hudson and Bergen Counties? Hudson Condos has the experience and expertise you need. We’ll help you find a condo that meets your specific requirements.
The perfect home is waiting for you. Contact us today.