Avoid These 6 Most Common Mistakes First-Time Home Buyers Make

The last thing you want to do is find the perfect house that fits your budget but realize you cannot afford it! This is because what you think you can afford and what the bank is willing to lend you may not match up. To prevent this from happening you should make sure to be pre-approved for a loan before placing the offer, especially if you have poor credit or unstable income. It will not waste the seller’s time, the seller’s agent’s time and as well as your agent’s time if you sign a contract and then discover later the bank would not lend you the amount you need or that it is willing to give you terms you find unacceptable. Being pre-approved will also send a message to the seller that you are a serious buyer who’s credit and finances meet the requirements needed to get the loan.

Another aspect that you need to focus on after you purchase a house is the other home-buying expenses that can surprise you if you are not ready. As a renter, you did pay bills like the gas bill, the oil bill, and cable bill. But a new home can come with entirely new expenses like closing costs which can be 3-4% of your home’s value and the moving expenses. You will also have to budget for property taxes, home insurance and any repairs the house needs (which can sometimes include expensive items like a new furnace or new roof).

If you buy a condo then you will have to pay the monthly maintenance costs whether anything needs fixing or not. Even cooperative apartments will be subject to similar costs.

This is potentially a two-fold issue and both of them can be problematic. The first scenario is you pass on a near-perfect house because it needs some paint and cosmetic updates, but has great structure and a great location.

It can also go the other way round. Finding a house that is updated with beautiful fixtures, finishes and decorated beautifully. This is a rookie home buying mistake because you get so busy looking at superficial details that you forget about things that are not easy to fix like structure, location, the yard or that it is on a busy road.

So, when shopping for a house you should keep in mind both the cosmetic details that can be altered as well as those that are expensive or impossible to fix.

You should never buy a house without doing a home inspection. A home inspection is one way to focus on the structure over the style of the house. Though a professional inspection will cost you about $300-$400 it is money well-spent as it will help you avoid potential disasters after closing. The inspection will include a thorough review of the home’s structural elements and plumbing, heating, electrical and cooling systems. This will give you the information you need to decide whether you will buy the home or negotiate with the seller to reduce the price or fix the problems.

You should never let your emotions get the best of you when you are searching for a home. Feelings for a home can blind buyers and they can end up overpaying for the home. Buyers can also get caught up in the heat of the bidding war or conversely, they get so exhausted and discouraged by the process that they settle for a house that is not right for them. So, you need to be level-headed and remember that buying a home is a serious commitment and you will have to live with it for years to come.

Though it may be tempting to go out and buy things for your “soon to be new home” you should avoid the temptation as opening a new line of credit can dinge your credit score. Borrowing money for a big purchase like furniture or opening a new credit card can impact your pre-approval, mortgage approval and create problems for your underwriter. It can even jeopardize your closing. First-time homebuyers especially often learn this lesson the hard way. According to Ross, “This is a financing red flag.” You can decide on your next purchase after closing.