Buying a home for the first time can be challenging. You have to consider so many variables that it’s easy to get overwhelmed and lose track of what you want in your new house. It’s important to find a great realtor and know exactly what pitfalls you need to avoid when making an offer on a property. Let’s explore some of the most common mistakes first-time homeowners make.
Choosing a Home that’s Always Been Out of Your Budget
If you’re like most people, you’ve always dreamed of owning a home and picking out your own furniture where nobody can tell you to take it down or get rid of it. However, one of the first-time homebuyers’ biggest mistakes is getting caught up in this fantasy and ignoring the financial expert’s advice.
Always remember that your home doesn’t have to be the fanciest on the block, and it’s more important to find one that you can afford. Don’t be fooled by a “for sale” sign with a low price; often, these houses come with serious repairs that you’ll end up paying for down the road.
Accepting the First Offer that Comes Your Way
It’s exciting to find a home you love, but don’t be in such a hurry that you neglect to negotiate your offer price down. Your realtor should work with you and your mortgage lender on this; they’ll both have an excellent perspective on current market prices and what’s fair.
Don’t panic or feel defeated if your first offer is turned down. Just rework the numbers and try again! Remember, you’re looking for a win-win situation here—one that both parties are happy with.
Believing that You Have to Pay Closing Costs
While some homebuyers are up for paying closing costs as part of their purchase, new homeowners should avoid this if possible. Yes, they can help you get into the house faster, but often it’s better not to pay them at all. Ask your lender about how much it will cost you before signing anything—you might be surprised by what they tell you!
Ignoring Future Repairs or Upgrades
While you’ll want to make sure the home is livable when you move in, don’t go overboard on buying new appliances or putting in a pool. Remember—those things add up and can add considerably to your monthly budget!
Instead, focus on what’s important: ensuring that any potential problems with the home are fixed before purchase. Your realtor should be able to help you with this, and they should also keep an eye out for any potential renovations that will increase the value of your house.
Choosing a House that Needs Too Many Repairs or Upgrades
Many people who bought homes just a few years ago had to replace their roofs within two years due to severe damage caused by Hurricane Irene. If a property has been on the market for a while, it’s usually because the seller is aware of some pretty serious problems with it.
Unless you’re experienced in-home repairs and have a good understanding of what needs to be done, it’s best to avoid these houses. You don’t want to find yourself in over your head financially or emotionally after buying a property that needs more work than you anticipated.
Forgetting to Shop Around for Mortgage Rates
It’s easy to get wrapped up in the excitement of house-hunting and sign on the dotted line without taking the time to compare mortgage rates. However, this could end up costing you big time in the long run.
Even a difference of a few percentage points can add up to thousands of dollars throughout your 30-year mortgage, so it’s best not to rush this part. Your realtor should have a list of several lenders they work with and can recommend, and you’ll probably end up saving a lot of money by comparing the rates from each one.
Not Asking for an Escrow Account
If you’re paying for private mortgage insurance (PMI), there’s a good chance that your lender will require you to set up an escrow account in which 20 percent of your monthly payment is deposited before it goes toward principal. This is a simple process, but be sure to request it if you think you need it. Your lender typically has to provide an escrow account if it’s requested, even if the loan doesn’t require one normally.
If you’re not sure about having an escrow account set up, talk with your realtor and lender; they should be able to walk you through everything and explain the benefits/drawbacks of having one in place.
If you’re a first-time homeowner, there are plenty of mistakes to be made. But if you follow this list and avoid these common pitfalls, it should go much easier for you! Remember—you don’t have to pay closing costs or upgrade everything when moving in. You also want to shop around for mortgage rates before signing anything and set up an escrow account with your lender, just in case. Your realtor can help guide you through all the steps involved to buy your dream home as easily as possible. So what’s stopping you? It’s time for you to get started on finding your perfect house today.