First-Time Homebuyer Mistakes You Want to Avoid
Stacie Samuels wants a do-over as a first-time home buyer.
Samuels, a nurse practitioner from St. Petersburg, believed she was well-equipped to purchase her first home, just a few years after completing her education. She was newly married, financially stable, and conscientious.
“Even though you dig into a lot of information, it’s still a very hard and complicated process,’’ Samuels said. “And I say that as someone who put a lot of time into it. There are a lot of mistakes you can make the first time around.’’
Samuels said she fell in love too quickly with the look of her new home but didn’t do enough research on its location, specifically the traffic patterns and the way her commute could get elongated. And she committed what many real-estate professionals consider a cardinal sin — trying to save money by not doing a home inspection. Samuels said there were mold problems that were previously undetected.
In her blog, Tampa realtor Carolyn Reynolds wrote that all homes — even newly constructed ones — could have problems. The key is recognizing the major problems that need attention.
“Sure, you ideally want to find a home that was owned by Mr. or Mrs. Clean who conscientiously took care of it during their entire ownership, but those are few and far between, and seeking them out is unrealistic,’’ Reynolds wrote. “Set your sights on finding a home that has small, easy-to-fix problems, and don’t freak out if some are worse than others.
“In other words, when considering making an offer, laugh at the loose doorknob but negotiate when it comes to water damage or worse. The nit-picky homebuyer, who plans on nickel-and-diming the homeowner into replacing missing switch plates and dripping faucets, is the picture of a deal-breaker-in-the-making.’’
Put simply, first-time homebuyers must educate themselves, but also know where to look for help.
“It’s a complicated process,’’ financial adviser Allen Wohlwend said. “It would be complicated for anyone, particularly someone doing it for the first time who hasn’t done a lot of planning or research.
“Like anything, you learn from your mistakes. Of course, it’s best if you can foresee those mistakes and not make them in the first place. Easy to say. Harder to accomplish.’’
One way a homebuyer can educate themselves by seeking out a homebuyer education course. HUD-Approved Housing Counseling Agencies provide these courses — both in person and online. Homebuyer education workshops usually cost less than $100, but can save you thousands by helping you avoid common mistakes.
5 Tips for First-Time Homebuyers
Here are some other warning signs and potential problems for first-time homebuyers to avoid:
The Home Inspection
Learn from the Samuels’ mistake: ALWAYS get a home inspection. By cutting corners and trying to save money, you could back yourself into a costly problem. Home inspectors offer protection and are trained to find problems you might not see. You need someone who’s an expert in evaluating the structure, construction and mechanical systems of a home.
What’s more, they can give you an approximate price of repairs that might be needed.
Read The Fine Print
Renting is easy. There’s usually a monthly payment — period! You might have to spend a few dollars a month more for renter’s insurance, but the landlord handles all the maintenance. Purchasing a home brings aboard an array of new costs, and they could be shocking if you haven’t done your homework. You must consider homeowner’s insurance and property taxes — and they vary, based on your location.
Make sure you understand the pros and cons of different types of mortgages. If your down payment is less than 20% of the purchase price, you must get private mortgage insurance (PMI), protecting the lender in case you default on the loan. There are mortgage closing costs and potentially homeowner’s association fees. All told, your monthly payment could go up by several hundred dollars because of costs and expenses that you never anticipated.
Find A Good Realtor
Some people might not even use a realtor, perhaps the sign of buyer paranoia. They don’t trust anything — or anyone — and get frustrated when their low-ball offers get rejected. By finding a qualified realtor and making a connection with someone who has your best interests in mind, you can avoid wasting time and additional stress. Realtors are trained negotiators who can analyze listings and prioritize your needs.
Having the right fit with a realtor is important. Ask for referrals from relatives, friends and co-workers.
Know The Neighborhood
It might look like your dream house — both inside and out — but pay attention to the surroundings. Most couples with children, or those planning on a family, are cognizant of the school district and other amenities for kids. But it’s more than that. Is there adequate drainage when heavy storms hit? Do you feel safe coming home at night? Are the neighbors similar in age and income?
When considering your options, it’s a good idea to visit the neighborhood at different times of the day and night.
Know Your Budget
Make sure you take the time to figure out how much home you can afford. When you are pre-approved for a loan, you don’t always have to use that entire amount. In fact, it’s usually better to lean toward a lower amount. If you are currently renting and have trouble making your payment, it’s not a good idea to assume an even greater mortgage payment.
And it’s an even better idea to base your mortgage potential on today’s income, not the promise of a better job or a potential raise. There’s no guarantee — especially in today’s uncertain times — of a better financial future.
- NA, (2015, August 4), Avoiding The 5 Most Common Mishaps People Encounter When Buying a Home. Retrieved from: http://blog.lendingtree.com/2015/08/04/avoiding-the-5-most-common-mishaps-people-encounter-when-buying-a-home/
- Overfelt, M., (2014, July 17), 8 Biggest Mistakes First-Time Home Buyers Make. Retrieved from: http://www.cnbc.com/2014/07/17/8-biggest-mistakes-first-time-homebuyers-make.html
- Rawes, E., (2014, September 14), 5 Foolish Mistakes First-Time Home Buyers Make. http://www.usatoday.com/story/money/personalfinance/2014/09/14/cheat-sheet-first-time-home-buyers-mistakes/15455069/