Buying a home isn’t easy or cheap. Between closing costs, the down payment, the home inspection, appraisal and other expenses, buyers can be tapped out emotionally and financially before they can even call the home their own.
First-time home buyers are often uninformed about what goes into buying a home and as a result, they make common mistakes that can end up costing a great deal of money.
Read on to discover 7 mistakes that first-time home buyers often make so you can avoid doing the same.
Choosing The Wrong Loan
As a first-time buyer it’s easy to get sucked into the wrong loan. Mortgage brokers are often looking to get you the payment you want so you’ll say yes to the loan. Unfortunately, sometimes they achieve artificially lower payments by offering questionable loans like ARM mortgages. You get a low payment, but 5 years later your loan adjusts and you can’t afford the higher payment.
New buyers also don’t realize their mortgage payments can increase in the future with changes to property taxes or insurance costs.
Buying Too Much House
First-time buyers notoriously overspend on their first house. They determine what they can afford based on what the lender says they can afford, which is usually too high.
Rather than taking on too high of a mortgage, choose a smaller starter home with lower payments and enjoy lower utility costs, less maintenance and a more affordable payment.
Skipping The Home Inspection
When buying a house, it’s tempting to skip the inspection, especially if you feel that you love the house and will buy it no matter what. Skipping an inspection is really risky, especially if there are major problems with the home’s wiring, plumbing, roof or foundation. Inspectors can alert you to any problems before the closing so you won’t be caught unprepared.
Not Shopping Around For A Mortgage
Interest rates and closing costs vary dramatically between lenders. In order to get the best deal and the lowest monthly payment, it’s important to shop around for different lenders. Aim to get a quote from at least 3 banks before choosing a mortgage to go with. Remember, they compete for your business.
Only Viewing The Property Once
You should visit the property at least 2 times before placing an offer. If you fall in love with a house during the first visit, sleep on it and come again later. Impulse purchases are never a good idea, and this is especially true for a large purchase like a house.
If you can, drive by the house during rush hour to get an idea of traffic on the street and noise levels. Typically weekend mornings are the calmest times and can make a neighborhood seem much better than it is. Check out neighboring properties and really get a feel for the whole picture.
Limiting Their Home Search Too Much
Don’t set your heart on a particular neighborhood or even a single city. Check out a variety of areas so you can see what your money will get you in different towns.
Not Using A Realtor To Make The Purchase
Before you forego using a buyer’s agent, you need to understand that the listing agent will always work on behalf of his client, not the buyer. The agent is motivated to get the highest price possible for the house since it increases their commission.
Working with a buyer’s agent will ensure that you have proper representation in the transaction and an unbiased professional fighting for what’s best for you.