Buying your first home is a big deal. There is no doubt about that. There is a lot to consider before even beginning to search for your home like neighborhood, price range, what style of home, and so much more. And then once you find a home there is another set of considerations and checklist items to stay on top of. It can be overwhelming for even the most organized of us. Here is a list of the top 5 mistakes by first-time homebuyers I commonly see and how to avoid them to make sure you have a positive experience with one of the biggest purchases of your life.
1. Not working with a licensed Realtor®.
A lot of people think they don’t need to work with a Realtor when buying a home – you have all the information you need right there on your computer, right? Sure websites like Zillow can give you a general idea of homes for sale, but by working with a Realtor (especially one that is knows the area you want to be in well) you increase your chances of getting in on a home you want. Wait for it to pop up on Zillow and it may be sold by then. Not to mention the vast knowledge your Realtor will help you with along the way. Things you may not ever imagine you need to know- resale value, what to look for in a home inspection, title opinions, stepping in when a lender isn’t communicating well enough. So many reasons to work with a Realtor, I promise you won’t regret this decision!
2. Not being willing to compromise on your must-have list.
We all want our dream home…walk-in closet, granite countertops, etc. But chances are, you aren’t going to find the house that has it ALL. When I talk with first-time homebuyers about what is important to them I do my best to find that homes that best fit their criteria. But I encourage them to look at the things in the home that they cannot change– like location, neighborhood, etc. Most things inside the home can be changed or updated. So, I know you wanted that beautiful farmhouse kitchen with stainless appliances but if everything else about the house is telling you ‘yes’, then compromising on a kitchen that can be remodeled down the road, is probably a good idea.
3. Waiving the home inspection.
There are a lot of costs that come up when buying a home and it seems like the ‘optional’ home inspection is one that you could do without paying, right? Wrong…this is not a good idea. Unless you are buying new construction, I will always advise paying for a detailed home inspection. Consider this the wellness check for your home and it is crucial to know what you are investing in. It will cover things like your roof, plumbing, mechanicals, windows, etc. Home inspections run a couple hundred dollars and that is money well spent for the knowledge of what potential maintenance or repairs costs you are likely to have down the line. Plus, in the event the home inspection reveals some serious issues you are not willing to sign on for, it is typically the only time you are able to walk away from the deal with no penalty.
4. Not educating yourself about closing costs and fees. One of the biggest surprises for many first-time homebuyers is the amount of money they need to bring to closing. Depending on what/where you are buying there are a myriad of costs and fees that will come up and need to be paid in order to close. Some of the typical fees are closing costs (attorney fees, lender fees, appraisal/title/recording fees, etc.), property taxes and homeowner’s insurance, PMI (if you are not putting down 20%), home inspection and possible repairs, and HOA fees if you are buying into a home owners association. Of course, there could be more too. So, make sure you talk in detail with your lender to understand what you will be expected to bring to the table on closing day and also what you feel comfortable with for monthly payments. Keeping in mind taxes and insurance. Those mortgage calculators on Zillow and other home buying sites often don’t include taxes and insurance in your monthly estimate!
5. Going on a spending spree before closing on your home. It seems like lenders these days are scrutinizing everything about your finances before you can get a loan and your credit score and more importantly, your debt to income ratio are the big ones. Your credit is checked before you can get pre-approved for a loan but then it is checked again before you close – so if you have any major changes to your credit or debt load that could have seriously consequences on your ability to secure financing to buy your home. So, I know you want to buy that new bedroom set and couch that would look so good in your living room but my best advice is to lay low financially until the papers are signed. You can get to those big purchases as soon as that house is officially yours.