First-time buyers are often a bit overwhelmed at the thought of buying a house.
The intention of this article is to help prepare you for what NOT to do when buying a house for the first time, and you’ll pick up some great information along the way.
Without further ado, let’s dive in…
1. Not educating yourself on the buying process
One of the best tips we can give to anyone who’s buying a house for the first time is to educate yourself on the steps involved when buying a house. Too many first-time home buyers are jumping into the housing market because it ‘feels’ right and this is a mistake. How can you know what feels right when you’ve never done it before?
Instead of buying a house based on feelings, you need to buy a house based on facts. Before committing to buy a home, you need to make sure that you’re ready to buy your first house.
Do you know what first time home buyer programs are available in your area? First-time home buyers have a number of benefits available to them that offer big time savings.
Find a top local Realtor in your area and ask them specifically to chat with other first time home buyers they’ve worked with in the past. Don’t hesitate to gather information on the experiences of others who have worked with them.
2. Not preparing to buy a house
Time to start saving. Once you think you have enough money saved, you are going to pay for the inspectors, the attorney, the appraiser, etc.
Not preparing properly is a common buyer mistake, especially one among first-time buyers who have never purchased a house before.
If you’re buying a house for yourself then you should have no problem putting together a list of your priorities. Those who are buying with a significant other will have to strategically prioritize what matters most to both people who will be living in the house. Those buying with the intentions of starting a family will have different priorities.
Knowing your priorities ahead of time is going to make for a much easier home search. The location should be priority #1 when buying a house – you can change the condition of a house, you can’t change the location (or the school district).
3. Finding the house before the location
A lot of time first time home buyers will wait to find the perfect house that will never hit the market. There are some things buyers MUST be willing to sacrifice in order to find a great home at a great price in an excellent location. If there is one thing a home buyer should never settle on, it’s location.
One common mistake a first time home buyer will make is failing to buy a house in the location they want because they are ‘tempted’ to buy a mansion in a location that is less desirable. Once you start previewing homes outside of your desired area you’ll confuse yourself. For instance, someone with a budget of $300,000 will be able to buy a much bigger house in Durham, NC than they would if they bought a home in Cary, NC. The difference here is schools, amenities, safety, commute time and more.
4. Overextending on your budget
One of the worst mistakes a first-time buyer can make is overextending on your budget. Your home instantly becomes a burden instead of something you can enjoy. One of the best things you can do as a homebuyer is reverse-engineer your monthly costs before you buy a house.
If you can spend 3-6 months calculating an average cost to live, you can set budgets for how much you’re comfortable spending and saving. Whatever is left over is a comfortable monthly payment on a house (don’t forget about mortgage insurance).
For those purchasing a home with less than a 20% down payment, private mortgage insurance is likely to be included as a requirement in owning your home. Private mortgage insurance will typically go away once you have paid back 20% of the loan.
5. Not having the right real estate team in place
Your real estate team is like a group of coaches for first-time home buyers. Everyone makes mistakes, it’s human nature. It’s your real estate team’s job to make sure they coach you through the mistakes proactively.
As a first time home buyer, it’s important you assemble the right real estate team. You’ll want to ensure you have the right mortgage lender, real estate agent, home inspector, and attorney.
Having the right real estate team in place will go a long way in your home purchase as they will be able to guide you throughout the process. Make sure you find a team that works well with you and works well together to ensure a smooth home buying experience!
6. Buying based on emotion
The best decisions you can make when buying a home are the ones based on facts. Too often I watch a buyer make an offer on a home they love only to be outbid by another offer. Hearing that the home sold to someone else is not easy. It’s one of the toughest things you can hear as a buyer, especially if it’s your first time.
Becoming depressed as a buyer is a common mistake first-timers make.
When you allow yourself to become depressed your body does two things typically. One, it shuts down completely and it no longer wants to buy a house because there was too much ‘pain’ experienced. Or two, you will buy anything just to feel better about missing out on the last home.
These are commons mistakes made by all sorts of buyers, not just first-time buyers.
If you make an offer and the home sells to someone else then treat it like a GOOD thing. You just picked out one of the most desirable homes on the market, meaning you recognize a good deal! Pat yourself on the back, and go find a better one!
7. Not calculating the true costs
Are you ready for all of the costs that come with buying your first house, and all the costs that come with homeownership? There is going to be a wake-up call for first-time home buyers who are looking at just their principal and interest monthly payments. There are many more costs that come with both purchasing a home and owning a home.
Looking at ‘what you can afford’ when buying a home is a common first-time buyer mistake.
What you can afford, and what you can afford while maintaining your current lifestyle are two entirely different numbers.
Some of the recurring costs you’ll want to be sure you include when buying a house are:
- Property Taxes
- Mortgage Insurance (If you put less than 20% down)
- Home Maintenance
- Homeowner’s Insurance
- Utility Bills
Final thoughts on mistakes made by first-time buyers:
It is imperative to factor loan origination fees, attorney fees, inspection fees, appraisal fees, mortgage insurance, and any other closing costs into your budget when buying a home. It is your job as a buyer to make sure you factor all the costs involved when purchasing a home. Your Total Mortgage loan officer or your realtor will be critical in helping you understand which fees apply to you, how much those fees will be, and what your options are.
I cannot stress to my buyers enough is that location is the most important part of a home. You can change the price, you can change conditions–you cannot change the location.
If you can avoid making these 7 mistakes when purchasing your first house, you are going to be in much better shape than most of the second and third-time home buyers out there!