Avoid These Common First-Time Home Buyer Mistakes

Avoid These Common First-Time Home Buyer Mistakes

  • Greg Clemens
  • 05/14/23

As a newcomer to the real estate market, it can sometimes feel overwhelming to navigate the complexities behind purchasing a home that you see online or in person. It’s human nature to fret a little when faced with making a life decision as important as buying a first home. Every first-time home buyer has to go through these challenges, but that doesn’t mean you can’t avoid making any big mistakes.

Buying a first home can, in fact, be a real opportunity to grow as a person or family and learn some life lessons that you can later pass down to others. Below are some of the most common mistakes that people make and advice for first-time home buyers on how to avoid them.  

Mistake #1: Not properly calculating your budget

The best way to hit the ground running whenever you set out on your first home-buying journey, whether you’re looking for Irvine homes for sale or elsewhere, is to take the time to set out a realistic budget. Almost every home purchase entails engaging with unforeseen hitches in your plan, so it can be truly beneficial to be conservative when it comes to budgeting. Consult a quality home affordability calculator to get a round estimate of what your budget will permit.

Mistake #2: Overestimating what you can afford

The general rule to follow is not to pay more than 30% of your total income on housing, though homeowners today often have to compromise and pay slightly more. Try to keep an open mind, even if the first home you tour at an open house appears to hit all the right buttons.
Create a list of must-haves when searching for properties before coming up with a wish list of amenities that you’d ideally have but could easily add on to the home later. The key here is to be realistic at the outset concerning what you can afford and saving as much as possible for future upgrades if that’s what you and your family want to do.

Mistake #3: Rushing through the mortgage process

If you’re just entering the real estate market, there can be pressure to proceed as fast as possible to find a lender and receive funding for the purchase in order to capitalize on a dream home or a property in a competitive market that seems like a perfect fit. You may think that speed is a priority. But you might be overlooking paperwork or financial details in the process that could later come back to bite you.

The best plan of action is to get in touch with an experienced local real estate agent to help guide you from stage to stage in securing a mortgage. Take the time to get multiple quotes from several lenders. Collect all your tax returns and account statements, and consider meeting with an attorney to ensure that you’re crossing all the Ts and dotting all the Is.

Mistake #4: Not applying to first-time home buyer assistance programs

It’s surprising how many first-time home buyers are unaware of all the helpful financial assistance programs that are available to them every year. It’s no fault of the home buyer, of course, but you might be leaving behind thousands in funding if you decide not to apply to them.

Some of the most common programs include those of the Federal Housing Administration (FHA), VA, or USDA. Many of these government-backed lending programs can help reduce your down payment to 3.5% or lower, while some can even drop it to zero. Consult with a local realtor to help navigate this essential step in the home-buying process.

Mistake #5: Searching for homes before being pre-qualified or pre-approved

No doubt, it’s much more fun and engaging to go out shopping for properties before you sit down with a mortgage lender to go over the details of what they’re willing to lend to you. But it can be a big mistake to start highlighting homes that you’d like to own before you have a concrete picture of what you can afford.

Meet with your lender in advance of seriously shopping for homes in your area to determine how much they can lend to you and your family. Understand the difference between a mortgage pre-qualification and a pre-approval. A pre-qualification will provide you with a rough estimate of the amount that your lender can give you, while a pre-approval is more definite. It is more of a conditional loan, depending on your current credit and financial health, that will give you a clear idea of the kinds of homes you can afford. A pre-approval needs to be issued by an underwriter and may be retracted if your financial situation changes dramatically between the time of signing for it and purchasing the home.

Mistake #6: Foregoing a home inspection

If your budget is tight, it may seem enticing to skip the home inspection before purchasing your first home. But this could pose serious issues further into the future, especially if you’re planning to buy a luxury home with a long history of repair and renovation. Be sure to factor in the cost of a home inspection in order to avoid paying extensive costs later on down the line if the integrity of the house proves to be less than what first met the eye.

Mistake #7: Overlooking closing costs

Finally, it’s very common for first-time homeowners to neglect to factor in the closing costs that any home purchase requires. These charges vary from state to state, so be sure to talk with your real estate agent before you finally put your name on the dotted line and discuss exactly what you’ll have to pay at the end of the home-buying journey. On average, most home buyers will pay anywhere from three to five percent of the total purchase price of the property on closing costs.

Get in touch with a local real estate agent today

If you have any questions or comments to share or need more personal advice for first-time home buyers, don’t hesitate to reach out today! Contact Greg Clemens and the Greg Clemens Team for more information.

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