10 Mistakes First-Time Buyers Should Avoid
Updated: Jun 2
Chances are that if you’re in the market for your first home, the very first place you went was to a real estate website like Zillow or Realtor.com and just started searching. Hmmm, three bedrooms or four? New build, move-in ready, or fixer-upper? You scrolled through hundreds of listings and imagined your future life in a thousand different pictures. Before you schedule a tour or show up at an open house, there are a few things we want to make sure you know, so you don’t make the same mistakes lots of other first-time homebuyers make.
Figure Out How Much You Can Afford Without a clear sense of what you can afford, you stand to waste a lot of time looking at places that may be out of your range. There’s more to it than what you can afford, too. If you haven’t set a monthly budget to be able to see where your money is going already, now is a great time to look over your last couple of bank statements, categorize your expenses, and see how much you have available for a monthly house payment. Use a mortgage calculator online to get a better idea of how much you are comfortable spending before you jump back into that house search engine.
Get Pre-Approved before You House Hunt Today’s market is so competitive that if you don’t have all of your ducks in a row before you find a home, it’s likely the house will be in contract before you can even put forward a bid. It’s okay to shop around for a mortgage lender, too—different lenders offer different rates, which can help you save money over the long haul.
Buy the Right Sized House There’s always that one house that is just outside your budget. You might be tempted to stretch your money and “make things work,” but buying more house than you need (or can afford) will bring unnecessary stress to your life and make you vulnerable to foreclosure should you fall on financial hard times. Just because you qualify for a larger mortgage doesn’t mean that you can afford the monthly payment that comes with it. Return to your budget and stick to the amount you’re able to pay each month to dictate your maximum home price.
Don’t Drain Your Savings We are a culture of instant gratification, but making snap decisions about buying a home is never a good idea. This is likely the largest purchase you’ve ever made, and while it’s exciting and easy to get caught up in the process, it’s best to slow down, plan your steps, and make sure you’re financially ready to go house hunting. One of the biggest mistakes first-time homebuyers make is using all of their savings toward their down payment. You don’t want to be scrapped for every cent just so you can get to closing. Make sure you keep a cushion in your savings in case something serious happens, even after you have your down payment secured.
Find the Right Neighborhood and the Right House There’s more to house hunting than the amenities on your list. If you find just the right house that turns out to be in a neighborhood you hate, you aren’t going to be happy, no matter how many bells and whistles the kitchen features. Make a list of the things that matter most to you outside of your home—is a short commute more important than the quality of the schools? How diverse is the community? What are the local politics like? Do you want a place with a lot of activity, or are you looking for something quiet and private? Is green space important? Will you be able to find a church or other organization that can provide you with community connections?
Research Resources Available to First-Time Homebuyers In a rush to find your first home, you might miss out on great loan programs that are created to benefit first-time homebuyers, making it easier for you to step into the joy and pride of owning your own home. Ask your mortgage lender if you’re eligible for any first-time homebuyer programs, like a U.S. Department of Agriculture loan or U.S. Department of Veterans Affairs. FHA loans only require 3.5% down with a qualifying credit score.
Don’t Underestimate Monthly Housing Expenses The mortgage isn’t the only thing you’ll be paying once you own your home. Your agent can help you understand your local taxes and utilities, and the current owner should be able to provide you with estimates for these and other maintenance costs. Don’t forget to factor in anticipated future repairs, like water heaters, furnaces, roofs, driveway maintenance, and so on (that cushion in your savings will come in handy for such a time as this).
Resist Other Purchases or Applications that Can Affect Your Credit Rating There’s a lot going on when you’re about to buy a home, but it’s best to hold off on any additional purchases or changes that might affect your credit score. Wait to apply for additional financing, credit cards, and so on from the time you are pre-approved until you’ve closed on your home.
Don’t Hold Out for the Perfect Home… There just isn’t one, no matter how long you look. Figure out what your non-negotiables are and then consider what you could do without—both of these steps can help you narrow down your search without eliminating a perfectly good home that may have checked off most of your boxes.
… But Don’t Rush the Process, Either. You don’t want to decide on a house in a flurry of emotion. It can lead you to pay more than you should have and strap you for cash. This is the place you will make memories to last a lifetime, but it is also an investment, and you want your investment to be sound. Stick to your budget, and don’t let your emotions marry you to a house you don’t even own yet.
Don’t be discouraged—we know this list is a lot. That’s why our team at JS REALTOR®Team is so committed to serving first-time homebuyers. We want to make the home buying experience one that preserves the excitement but sheds the anxiety. We provide clear guidance and advice to help you find the right home, at the right price, in the right neighborhood. Download our FREE planning kit and connect with us today! Let’s go find your first home!