Buying a home is a big deal. In most cases, a home is the single biggest asset people own. Houses are a huge investment and the buying process can seem overwhelming and even scary at times. If you’re not careful you may end up with a serious case of buyer’s remorse. If this is your first time buying a house it’s important to be aware of common mistakes first time homebuyers make and how best to avoid them.
Only looking at one lender
Buying a house is like buying anything else, the prices vary from brand to brand and store to store. Simply getting one quote from one lender is not enough. Take time to get mortgage rate quotes from multiple lenders. It’s good to shop around for different rates and closing prices. Always explore multiple options before making a decision. Think of this like buying a new car and going around to different dealerships to compare quotes, the same standard applies. Sadly, most people just go to one lender and leave it at that.
Making too small of a down payment
These days not everyone needs a 20% down payment. While in past years that was the standard, now things aren’t so rigid. In some instances, such as in FHA loans, you can put as little as 3.5% down. For other cases, you may be eligible for housing assistance programs designed specifically for first time homebuyers. Many states such as Iowa, Michigan, Ohio, and Wisconsin, have state tax credits for first time home buyers as well. Though a higher down payment allows you to have a smaller mortgage, plenty of people nowadays are buying homes without having the whopping 20% down.
Looking without consulting a lender
One of the biggest mistakes first time home buyers make is looking at places without first talking to a lender. What people think they can afford often is not the same as what banks are willing to lend you. If you start shopping without first getting pre-approved, you may end up getting attached to a home you can’t afford. In some markets, you can lose a house if you do not get pre-approved for a mortgage loan. It’s always important to know what you can afford before you begin shopping.
Not factoring in other costs
There are a lot of expenses that go into buying a home beyond the down payment and the monthly mortgage. Going from renting to owning is a huge additional cost and many frequently overlook those other costs. Property taxes, home insurance, repairs, and any homeowners association fees all add up quickly. Not being prepared for these additional expenses is a huge mistake a lot of first time homebuyers make. After a few payments they find themselves drowning in bills they didn’t account for. It’s not like renting where if something isn’t working you can just call maintenance and have them take care of it.
Letting emotions get the best of you
Buying a house is a huge milestone. It’s a right of passage in its own way. For first time homebuyers this the place where they’ll likely begin their family. Lots of memories will be made and emotions will be high. However, it’s important not to let your emotions run too high to the point where it clouds your judgement. Getting too emotionally attached in the process can lead to things such as overpaying and not taking other important factors into consideration. Make sure you plan out your financing well in advance and consult multiple lenders to get the best prices possible. Know what you can spend going in and have a clear mind so you don’t get too attached.