Buy your first home with confidence. Uncover the common errors first-time buyers make and how to steer clear.
From exploring new neighborhoods and attending open houses to the thrill of stepping into a place that’s all yours, there’s nothing quite like the experience of buying your first home. However, many first-time homebuyers find that the process isn’t always smooth sailing.
A lack of information coupled with some common misconceptions about the home-buying process can lead to mistakes that impact you and your family for years to come. With so much to consider and so much at stake, it’s normal to feel like you’re venturing into uncharted territory.
The good news is, a bit of knowledge and some preparation can help you avoid common homebuying pitfalls. Let’s take a look at some of the mistakes you’ll want to avoid as you embark on your homebuying journey.
Avoid These 4 Common Home-Buying Mistakes
By keeping these common homebuying mistakes in mind, you’ll be one step ahead in your own journey to homeownership. Here are four common issues and the solutions that can help keep your purchase on track.
1. Failing to Plan for Additional Expenses
When you’re searching for your dream home, it’s common to get caught up in the excitement and forget about your budget. Taking the time to get prequalified for a mortgage loan can help you understand what you can afford. However, it’s important to recognize that making an offer that pushes your financial limits can leave you strapped for cash.
Many first-time homebuyers fail to account for all the costs associated with buying a home. In addition to the home’s purchase price, you’ll need cash to cover things like:
- Closing costs
- Property taxes
- Utility bills
Depending on where your home is located, you may also be required to pay homeowner’s association (HOA) fees.
As you’re planning out your budget, make sure have funds available for minor repairs and home maintenance costs. Consider things like purchasing a lawnmower or hiring a landscape maintenance company. Also, don’t forget about the cost of hiring movers or renting a moving van and the expenses associated with purchasing furniture, décor, and other items for your new home.
When evaluating your budget, keep in mind that failing to plan for these additional expenses can quickly overwhelm you, potentially causing significant financial distress.
Solution: Before you get too deep into the homebuying process, consult with an expert, like an experienced real estate agent or financial planner. This can help you set a realistic budget and avoid making an offer you can’t afford.
2. Confusing Prequalification with Preapproval
Prequalification and preapproval are two different stages of the mortgage process, and confusing the two can create some potential issues. Getting pre-qualified is typically the first step. This doesn’t guarantee you’ll be approved for a loan, but it does give you an idea of the amount of financing you’re likely to qualify for. Since prequalification typically doesn’t require documentation to back up the information you’ve provided, your loan estimates may not be completely accurate.
On the other hand, pre-approval is a conditional loan approval based on your credit and income documentation. If something comes up during the actual application process, your loan can still be denied. However, once you’ve reached this stage, the lender will have already assessed your ability to repay the loan, giving you a more reliable estimate.
Solution: Make sure you understand whether you’ve received a prequalification or a preapproval. If possible, consider going through the full preapproval process before making an offer. This can minimize the chances of an unexpected change.
3. Failing to Consider Different Home Financing Options
Applying for a mortgage can be one of the most stressful steps in the homebuying journey. The number of available options can be overwhelming, causing many first-time homebuyers to choose a conventional mortgage by default, believing it’s the easiest and most straightforward path. However, failing to explore other options can be a costly mistake.
For example, a Federal Housing Administration (FHA) loan can offer flexibility that a conventional loan might not. This can be an excellent option for buyers who want to put down a smaller down payment or have credit issues.
Veteran’s Administration (VA) loans are specifically designed for veterans and their families. They often require no down payment, easing the upfront financial burden of purchasing a home. Down Payment Assistance (DPA) programs also exist, helping eligible buyers offset initial costs. Additionally, there are unique loan programs targeted at rural areas, like the USDA loan program. Special state and local programs may also offer incentives to first-time buyers.
A home inspection may seem like an extra cost and hassle that you can avoid, especially if everything looks great during your initial visit. However, it’s critical to remember that a home is a major investment. The last thing you want is to find out that there’s a major problem with the home after you’ve already made the purchase.
A professional home inspection can catch problems that may not be apparent at first glance, giving you peace of mind and potentially saving you from costly repairs. If your home inspection reveals significant problems, you may be able to negotiate the contract so the current homeowner fixes the issues or adjusts the price accordingly.
Solution: Make the home inspection a non-negotiable priority. Tell your real estate agent that an inspection is a must before you close the deal and ask them to help guide you towards options that fit within your budget without compromising the quality of the review.
Navigate Your Journey with Expert Guidance
Are you ready to turn your dream of homeownership into a reality? Don’t do it alone. Keller Home Loans is dedicated to making your first home purchase as smooth as possible. We’re here to guide you through every step, providing tailored financing options that suit your needs. Contact us today to explore the best ways to finance your dream home.
