Buying a new home can be a complex process, and even more so if you have never done it before. Still, first-time home buyers mistakes on such an investment can be costly. It pays to do your homework and steer clear of issues that have caused problems for many first-time home buyers. In some cases, the consequences can be devastating.
Here are 10 mistakes that you will want to avoid when you purchase your first home:
- Not saving enough for a down payment. A sizable down-payment will not only give you a lower monthly payment, it may also make your loan more favorable to underwriters.
- Impatience. As excited as you may be about getting a new home, it is a process. Taking your time to follow each step carefully will save you headaches and heartaches later on.
- Not budgeting for ancillary costs. In calculating what you can afford, be sure to do your homework on all of the extra expenses that may creep up on you otherwise.
- Skipping a home inspection when considering an existing home. If you think you’ve found your dream home, don’t let the previous owner or realtor convince you not to do a home inspection. The home inspection report may include long list of repairs that could kill your budget if you don’t negotiate before sealing the deal. Despite a potentially long negotiation process, nothing is worst then skipping the inspection for a quick move, only to have a septic tank failure or a devastating roof leak two weeks later.
- Not shopping around for homeowner’s insurance. Insurance rates can vary quite dramatically from company to company and state to state. Get several quotes and compare them closely to get the best deal.
- Changing their credit situation between home loan approval and closing. What you may not know is that your lender will likely pull another credit report right before closing. Keep paying your bills on time and avoid any other large purchases or new credit cards.
- Trusting verbal agreements. If there are any promises or contingencies that come up during negotiations, be sure to get everything in writing. Even among the most trustworthy parties, you don’t want to rely on verbal communication and memory alone.
- Getting overly emotional. Obviously, buying a new home is a huge investment both financially and emotionally. Still, keep in mind that it is also a business transaction. It pays to be as objective as possible.
- Having unrealistic expectations. It is important to sanity check a long list of new home features and requirements with your real budget. Prioritize your wish list and know which items you may be willing to compromise.