Are you a first-time home buyer, or maybe haven’t purchased a home in the last few years? Today, I’m going to be sharing some first-time homebuyer mistakes you’ll want to try to avoid when buying a home. Make sure to read through to mistake number 5, as it’s a big one that I’m seeing a lot in today’s market.

1. First, let’s address the first problem that homebuyers regularly make, that is looking before you are financially ready. Once you get the idea in your head that you want to buy a house, it’s difficult not to spend every minute on Zillow or Realtor.com looking at every house that pops up. You might even start creating a priority list in your head of things you HAVE to have based off what you see on those pages. However, this can be very dangerous until you’ve spoken with a lender and have a general idea of how much you can actually afford. Not only can this waste a lot of your time, but it also can create unrealistic expectations and I’ve seen it lead to tears! Another thing to keep in mind, is just because you are approved up to a certain amount, doesn’t mean you should actually spend that amount. Depending on how you are paid, lenders qualify you based on your gross income. Meaning they do not calculate things such as actual taxes and insurance that you may pay out of your check. They do take into account your debts, but not other expenses such as what you spend on a normal day to day basis. It is important to get very clear on how much you spend in a month, and then calculate how much that leaves you for a mortgage payment. Keep in mind, that you’ll also have extra expenses such as utilities and repairs you should calculate into your budget. If you’ve ever heard of the term “house poor,” this is how to avoid that.
2. Let’s talk about hiring the wrong help. I’ve said this before and I’ll say it again, just because your cousin or next-door neighbor is a Realtor® or mortgage lender, doesn’t mean they are the best option for YOU. Buying a house is most likely the biggest purchase you can make in your life, and you could potentially lose thousands of dollars by letting the wrong person help you. When looking for an agent it is important to find a dedicated buyer’s agent who works full time AND has a track record over more than, like 6 months!In addition to your realtor, you should also be careful with who you use to finance your loan. Though you may never even see your lender in person, they are a crucial part to your home buying process. Each lender can offer different programs and competitive rates, so it’s important to shop around and not just settle with the first lender you speak with. It’s also important to find a lender who you can easily reach and feel comfortable asking questions with. This communication is vital and could be the determining factor on if you close on your house on time or not. Your Realtor® very likely has 3 or 4 “Go to” lenders that you can trust, so avoid calling someone from an ad you saw online, or worse yet, on television.
3. Not understanding your timeline. Beginning your home search too early, or too late can be a big mistake. Let me break down the timeframe for you. Depending on your criteria, the actual home search can take anywhere from a week to a few months. Once you’ve found a house and had your offer accepted, this process should take an additional 30-45 days to close on your house. If you start looking too early, there’s a good chance the homes you are looking at will not be available when you are ready, and you also might quickly burn out from the search. But not giving yourself enough time to find a home could potentially leave you homeless, or having to “settle”, depending on your current living situation.This is an emotional process. If you aren’t clear on your timeframe and priorities, it leaves room for decisions to be made based on emotions, which can be dangerous. When you are clear with these things, you will be able to make confident decisions. This leads me to number 4.
4. You must have CLEAR priorities. It’s important to get very clear on what is a non-negotiable for you. Now I’m sure you may WANT a bunch of things for your next house, but try to be as realistic as possible and list out the items that are top priority for you. This may seem simple and obvious, but trust me, after seeing just a few houses you will soon start blending them all together. When you have a priority list it will help you sort through the houses more easily and help you move on to better options. This will also help you when it comes time to make a decision about putting in an offer. It’s very easy to get caught up in the looks of things sometimes and you may lose sight of your NEEDS if they aren’t clearly defined.
5. Lastly, and this is a BIG one, trying to predict the market. I get asked all the time about how the market is doing. Sometimes people are just curious, but a lot of times people are genuinely wanting to know because they are trying to pick the right time to buy or sell. While it’s good to be informed of current market conditions, it’s important to do what’s best for YOU and YOUR situation. If you are planning on being in your next house for 5 or 10 years, it doesn’t really matter what the market is going to do. Historically speaking, your value WILL go up with time, I believe there’s like a historical 4% increase year over year. You should be purchasing a residence because you NEED a home, so don’t treat it like you’re day trading on the New York Stock Exchange.Now, if you’re looking for an investment property and wanting to make some quick cash, then this is a different story. But if you are looking to increase the quality of your life, then you should buy when you are comfortably and financially able to do so. If interest rates are high, that may mean that prices are a little lower and then you can likely refinance in the future. If they are low, then prices might be a little higher. If we had a crystal ball and could predict the market, we would all be rich. So, it’s best to stay focused on your priorities and buy when you can comfortably do so.

Of course, there are dozens of other mistakes that I’ve seen over the years that I’m counseling my customers against, but I simply cannot note them all here. If you have one that you think should be on this list, please message me and perhaps others can learn from it, or perhaps I’ll even expand on it. If you have questions about the real estate market, or if you’re thinking of buying or selling, feel free to call me or use the contact form here.

 

 

Published on September 06. 2022 / Tags: first time home buyer, Home buyer mistakes / no comments.