Ready to jump into the housing market? Buying a home is an undertaking that can cost time and money. But you’re not alone—even veteran repeat homebuyers can sometimes forget about the best ways to navigate the market and optimize your savings.
Thankfully, first-timers can gain some peace of mind by avoiding these common mistakes.
1. Not Getting Pre-Approved
Many first-time homebuyers get caught up in researching home layouts, square footage and other attributes. However, conducting thorough financial research and planning should be the priority for new homebuyers. Often, real estate agents require lending pre-approval before showing potential homes. Obtaining pre-approval from a mortgage lender would be a good first step for first-time homebuyers.
2. Taking on Debt Before Buying a Home
A huge factor in credit scores is debt-to-income ratio. Lenders are in the business of risk management and, subsequently, conduct thorough research before approving mortgage loans and again before closing on a home. Don’t ignore your credit score or take on new debt through big purchases right before proceeding to shopping for a new home.
3. Underestimating the Cost of Homeownership
Maintaining a home can cost a bit more than renting—maintaining yards, appliances and home upgrades make a difference. New homebuyers should factor in finances for unexpected maintenance or increased utility costs. (Oh, and don’t forget about property taxes, either.) Preparing for additional expenses will help ease a lot of stress in the long run.
4. Skipping the Home Inspection
New homebuyers should watch a few episodes of Holmes-on-Homes on HGTV to get an idea of potential problems that can crop up with a home. You can avoid being haunted by previous homeowners’ decisions by hiring an independent, professional home inspector to comb through your future property before closing. It will save you from dealing with repairs down the road.
5. Jumping into a Fixer-Upper Project
Sometimes a fixer-upper can look like a great value option, especially considering how thrilling some fixer-upper TV shows make it appear. But new homebuyers won’t have the luxury of backing from a TV crew or production company budgets. For a first-timer, make sure you have the right mind-set and budget to see the project through before you decide to take on a fixer-upper.
6. Breaking the Bank on a Downpayment
In many scenarios, homebuyers are required to place 20 percent down on a new home. Many homebuyers will spend an entire savings account on the downpayment, leaving their accounts empty. Consider your newly modified monthly budget before making a decision like this. Save up. It will require extra patience, but the extra breathing room will be worth the wait. (And SDHDA has a program meant for those in need of downpayment assistance.)
7. Not Seeing the Big Picture
While it’s impossible to predict the exact future, researching future neighborhood developments, zoning laws and traffic can help buyers avoid unwanted surprises. Notice a lot of undeveloped land surrounding your home? What might get built there in the future? Will it bring more traffic to an already busy road? Are home values increasing or declining in your neighborhood?
8. Rushing into an Agent Relationship
Real estate agents have to balance the ethics of acting in the best interests of buyers, sellers and their bosses. New homebuyers should put extra time into researching agent options and talk to friends and family about agent suggestions. The extra effort will pay off in the end.
Make the time, take the time
The morale of the story is this—doing extra prep-work and not rushing into buying a home can save first-time homebuyers from wasted time, money and stress. And that’s a good thing.