5 First Time Home Buyer Mistakes to Avoid
Buying your first home is one of the most exciting experiences of your entire life. It’s understandable if you’re in a rush to close the deal and finally become a true homeowner. You need to be careful though because if something goes wrong in this process, it can create years of problems.
Here are 5 of the most costly first time home buyer mistakes that you should definitely avoid:
Mistake 1 – Not setting a budget
Before you start looking at homes, you should figure out exactly how much of a home you can afford to pay per month for your mortgage. Otherwise, you could end up buying a house that you can’t afford and would only realize your mistake after you’re locked into a loan.
To figure out what you can afford, take your monthly after-tax income and subtract all your other expenses like the amount you spend on food, your car payments, your insurance payments, what you expect to pay for bills, and any other expense you deal with every month. Whatever’s left over will be the amount you can afford to pay per month for your house.
Mistake 2 – Looking at homes before qualifying for a mortgage
After the housing bubble crashed, banks toughened their lending standards to avoid any more problems. This is one of the first time home buyer mistakes that can make it harder to qualify for a mortgage. Before you start looking seriously at homes, you should contact a lender and apply for pre-approval for a mortgage. This will let you know if you can qualify and for how much money. That way, you can focus your search on homes you can actually buy and won’t face the disappointment of finding your dream home only to realize you can’t qualify for financing.
Mistake 3 – Forgetting about extra costs
Buying a home comes with all kinds of extra costs that you don’t face as a renter. These can catch first time home buyers off guard. When you actually buy your house, you’ll need to pay several one-time fees to close the deal to handle things like setting up your mortgage loan, paying an attorney to handle your paperwork, hiring an appraiser and inspector for the property, and transferring the title of the property. These add about 2 to 5 percent to the cost of buying your house.
After you’ve purchased the house, you’ll also need to pay for property taxes, homeowners’ insurance, and possibly homeowner association fees depending on your neighborhood. These can add another few hundred dollars to your monthly payments so make sure they’re part of your budget.
Mistake 4 – Skipping the home inspection
You should never buy a house without a professional inspection first. What looks like the perfect home could have all kinds of hidden problems like a damaged foundation, a leaky roof, or faulty plumbing. If you rush into a purchase, you’ll only discover these problems when it’s too late. Then you’re on the hook for thousands of dollars in extra repairs. Save yourself the trouble and invest a few hundred dollars in a proper inspection before buying.
Mistake 5 – Not working with a real estate agent
Professional experience is a big help when you’re buying a house, especially if it’s your first house. You shouldn’t try to navigate this process on your own. An experienced real estate agent can help you find the perfect home, handle the paperwork, and manage negotiations with the seller. This can save you money, problems, and frustration and is definitely worth the investment.
Too many first time home buyers get themselves in trouble by not planning right. Don’t let this happen to you. If you can follow this advice and avoid these first time home buyer mistakes, you’ll be handling the buying process like a real pro.
