We get it. The idea of finally buying a house can get you excited. But be sober enough to realize that there are a lot of things that you need to consider to make the transaction as pleasant as possible, leaving very little room for buyer’s remorse.
We have gathered a list of typical oversights that first-time home buyers committed just because they got too excited.
10 Common Mistakes that First-Time Home Buyers Make
1. Not figuring out how much they can afford
The prospect of owning a home sometimes gets the best of people, thinking that a loan can take care of everything. However, without knowing how much they can afford, these people end up wasting their time checking out houses that may be too expensive for them or are below the optimal price level.
2. Settling for only one rate quote
Some first-time buyers make the mistake of neglecting to do their research and just settling for the first mortgage that they see. When it comes to shopping for mortgages, it pays to have choices as interest rates, discount points, and closing costs vary from lender to lender. You can save as much as $430 in the first year alone if you take the time to compare lenders.
3. Failure to make sure their credit report is accurate
One of the things that can hurt you financially when buying a home is failing to update your credit report and correcting any errors on it. Know that lenders will scrutinize your credit report and use it to base their approval and how much the interest rate is. You may end up getting a higher interest rate than you deserve.
4. Not waiting until they had enough for a bigger down payment
While there are a lot of loan programs that have very low to zero down payments, it might not always be a good thing. The bigger your down payment, the smaller your mortgage making it easier to pay your monthly dues. Make sure that your down payment is enough to secure you a monthly payment plan that you won’t have trouble making.
5. Not doing their research about first-time homebuyer programs
If you think you don’t have enough savings to make a decent down payment on a property, don’t let this be a hindrance. There are a lot of programs that are tailor-made for first-time buyers who are in this situation. Ask a mortgage lender about the options they have and try looking for some programs in your state.
6. Or any of the government’s home loan programs
In a lot of cases, ignorance is not bliss. A lot of first-time buyers want or need to make smaller down payments but have no idea that the government has certain programs that can help them acquire a property with low to zero down payments. Do your research about USDA loans, VA loans, and FHA loans and see which one works best for your situation.
7. Not having saved enough money and built an emergency fund
Whenever you buy a previously-owned home, repairs are inevitable. A lot of first-time homeowners end up being surprised by the high cost of repairs and renovations. Whether it is replacing the water heater or redoing the roofing, the upkeep will cost you a lot. It will hurt you really bad if you don’t have enough money set aside.
8. Having no idea of whether or not to pay discount points
Mortgage discount points that are paid upfront help reduce the interest rates on your mortgage. Any savings on interest rates will benefit you, especially in the long run. Paying for discount points helps put you in that position.
9. Not shopping for a mortgage first
We admit it’s more fun to go around looking at houses than shopping for mortgages, but you will only end up wasting your time if you do that. This is just similar to going window shopping. You’re checking out stuff you cannot afford to buy yet. While having a vision for your future is good, so is coming to the table armed with the things you need to turn that vision into reality.
10. Underestimating the real costs of owning a house
Just because you closed the deal and already moved in doesn’t mean you’re in the clear. It takes a lot of money to own and keep a home. You have other things to consider such as homeowners’ insurance, regular maintenance, utilities, and of course, your monthly mortgage payments.
So if you’re a first-time homebuyer, don’t get caught up in all the hype. Carefully and thoughtfully come up with a strategy that will work well for you not just in the here-and-now but, most especially, in the long run. Owning a home is a great privilege and a wonderful experience. It would be such a shame if you end up regretting the decision just because you got too excited.
