5 Common First-Time Homebuyer Mistakes
1. Not Getting Preapproved
The home buying process can be exciting, but first-time buyers are warned against jumping right into the shopping process before getting preapproved for a mortgage. Preapproval is important for buyers for many reasons. First, preapproval is the easiest and most accurate way to determine how much house the buyer can afford. Getting pre-approved by a mortgage lender also offers the buyer a reliable price range to stay within while house hunting. Finally, preapproval makes the buyer appear more serious to sellers, which can aid in bidding war situations.
2. Underestimating Costs
The cost of buying a home does not stop at a downpayment and monthly mortgage payment. In addition to the major purchasing and closing costs, buyers also need to consider the addition of property taxes, utility bills, and homeowner association fees. The home may also require repairs or renovations, and routine maintenance costs should also be taken into account. Moving and storage costs should also be factored into the homebuyer’s budget, especially if they are relocating to another state.
3. Spending All Your Savings
Saving for the down payment and closing costs of a new home can be a challenge, and time-consuming. However, buyers should take the extra time to save money beyond what is merely required for closing. Emptying a savings account is risky since hidden or unexpected costs are always a possibility during the home buying process. When housing hunting, buyers should always make sure that they can afford all potential costs that come with purchasing a home before depleting their savings.
4. Not Researching the Neighborhood
While searching for the home itself is the most important factor of house hunting, buyers should also remember to research neighborhoods before they are set on their dream home. The neighborhood crime rate, school district ratings, and proximity to shopping and entertainment are all factors that homebuyers should consider. After all, it may be harder to enjoy the home itself if the buyer is less than satisfied with the location.
5. Making Emotional Decisions
When a buyer finds what they perceive to be their “dream home,” their emotions can quickly get in the way of making sound financial decisions. Though it is easy to get caught up in the excitement, homebuyers should primarily base their purchasing decision on the facts of their financial situation, rather than their feelings about the home. Purchasing a home is likely the largest financial investment a person will make in their lifetime, which is why it is important to have a rational mindset when making a buying decision.
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