The process of buying a house for the first time may bring a mix of feelings, from excitement to confusion to downright fear.
Unfortunately, if you hook up with the wrong real estate agent you may harbor those last two throughout the entire transaction. It doesn’t have to be that way, though.
There is a step-by-step system to the home purchase process and, once you know how it works, everything about it becomes less scary and more thrilling. One of the ways we assist our first-time home-buying clients is by helping them learn from others’ mistakes.
Let’s take a look at five of the most common mistakes that occur when home buyers try to skip a step or take them out of order.
1. Failing to prepare
Too many first-timers get overly excited and skip right to looking at homes for sale online or hopping in the car to troll for open houses to view.
That part (yes, the fun part) of the process comes later. After all, if you won’t be paying cash, you don’t know yet how much you can spend on a home. That’s the first step – preparing your finances and visiting a lender for loan pre-approval.
When you know how much you can borrow you can skip looking at homes that you can’t afford and avoid the disappointment that comes with that mistake.
2. Borrowing too much
While the lender will determine how much of a monthly payment you can afford, it’s up to you to determine how large of a house payment you feel comfortable with, within the lender’s limits. You don’t have to borrow up to the lender’s limit.
In fact, find that comfort spot and ask the lender to give you a price point according to your monthly limit. This way you know you can still pay your bills, vacation (if that’s something you budget for), put money aside for college tuition for the kids and other of life’s necessities.
3. Getting emotional
Yes, it’s hard to avoid becoming emotional when you find the home you want for the price you can afford, but don’t give in to emotions. Treat the purchase process as a financial transaction so you don’t become overly emotionally invested in it. Too many first-timers throw common sense to the wind in their efforts to win the home they think they must have.
4. Not getting to know the neighborhood
One of the things we see frequently are homebuyers who are so smitten with the home that they don’t consider the neighborhood in which it is located.
While the home should meet your needs, the neighborhood (location, location, location) is critical to your future happiness and the home’s future value.
Do some research. Find out the crime rate in the area and, if you have children, check out the local schools. Tour the neighborhood during various times of the day and night to get a handle on what kind of neighbors you can expect.
Are there nearby amenities, such as a park for the kids, shopping and anything else you need to feel comfortable?
Finally, consider the commute from the neighborhood to where you work.
5. Having champagne tastes on a beer budget
This is your first home, not your forever home. Naturally, it won’t be perfect and if you are insistent that you will find perfection in a home, you’ll be very disappointed.
You can, however, come close. Make those wish lists, breaking them down into “Must-have features” and those you’re willing to compromise on.
In a few years, when the home has increased in value, you can sell and then afford to be a bit pickier.
Avoiding these common mistakes gives you a leg up on the competition in the real estate market. While the competition is making these blunders, you’ll be making an offer!