Important First-Time Home Buyer Mistakes To Avoid

Buying your first home is exciting, but many first time home buyers are susceptible to some unexpected pitfalls. It’s important to get up to speed on some of the unexpected mistakes many first time homebuyers make when they begin searching for their first home. We here at FifthAndHazel have compiled a list of six common mistakes that first-time homebuyers often make, along with tips on how to avoid them.

6 Home Buyer Mistakes To Avoid

First-time home buyer mistakes to avoid

1. Shopping For A House Before Shopping For A Mortgage

Oftentimes first time homebuyers will begin their search for a house by looking at homes. While this may seem like the logical first step, it’s not the right way to go about your home search. Before you begin looking for houses, you would be best advised to shop around for a mortgage. By shopping around for a mortgage you can narrow your search down to homes that are realistically in your budget, and save yourself the costly mistake of closing on a home you cannot afford. Make sure you have a realistic idea of how much house you can actually afford before beginning your search to save yourself unnecessary work and potential disappointment.
home buying mistakes

2. Snapping Up The First Mortgage You Find

Just like you will be shopping around for a house, you will need to first shop around for a mortgage. A common mistake that first-time homebuyers make is to assume that mortgages will be similar across brokers and lenders, and therefore not worth the effort of shopping around. When calculated over the lifetime of the loan, even a small discount can translate to hefty savings. Speak to several lenders and mortgage brokers to ensure you are getting a competitive offer. Shopping around for mortgages is a crucial step, and will enable you to purchase more home with the money you have available.
Financing Options

3. Not Looking Into All Financing Options

Once again, it’s important to do your homework when it comes to financing your home. Don’t overlook programs like VA, FHA, and USDA loans. Each of these loan options offer unique benefits, and it’s worth checking if you qualify.

- VA Loans are offered by private lenders, but are backed by the Department of Veterans Affairs. VA loans generally offer better terms than traditional loans, and the majority of active and former service members, as well as members of the National Guard, qualify for them.

- FHA Loans are loans that are backed by the Federal Government, and can be very attractive to first-time home buyers due to the relatively low down payment they require. However, in contrast with traditional mortgages where borrowers are required to pay mortgage insurance until they have paid off 20% of their home, those who take FHA loans will be required to pay FHA mortgage insurance for the lifetime of the loan.

- USDA Loans are intended for prospective homeowners who are looking to purchase a home in USDA-eligible areas. This type of loan is suitable for people with lower incomes who are interested in purchasing a home in a rural area.

Credit Score

4. Not Keeping Your Credit In Check

We all know it’s important to get your credit score in order before shopping for a mortgage, however a common mistake with first-time homebuyers is not giving their credit a break even after they’ve been preapproved. Your mortgage lender will check your credit several times between preapproval and closing a deal. Any big purchases from the point that you have been preapproved and until you have the keys in your hand should either be put off, or at the very least not purchased on credit. A sudden jump in your debt-to-income ratio is risky and can jeopardize the sale. Don’t make the common mistake of buying furniture or appliances for your home (or any similar large purchases) before the sale has been finalized.

5. Not Knowing Where To Compromise

This is a big one, as it will have an impact on your day-to-day life in your new home. It’s unfortunately all too easy to get swept off your feet by a beautiful home, but make sure you know what’s truly important and what’s not. Train your eye to overlook cosmetic imperfections, such as ugly paint or dated light fixtures. These are relatively cheap and simple fixes, and are not reasons to turn down a home. On the other hand, many sellers will often “polish up” a property with these little fixes and furnishings in order to make it more attractive to prospective buyers. Just like you wouldn’t turn down a house with dated fixtures, you shouldn’t be sold on a house just because it’s been freshly painted. Ugly wallpaper you can compromise on, but don’t compromise on the big stuff. If you know you need a 3-bedroom home with a master bathroom, that’s not something you should compromise on just because the living room has been painted with a fresh coat of paint.

6. Not Considering More Than Just The Home

No less important than the house itself is the neighborhood it occupies, and many first time home buyers risk become enamored with a house without making sure they feel the same way about the neighborhood. Try to get a feel for the neighborhood during different times of the day and during the weekends to make sure there are no unexpected things that could affect your daily life in the home. Also check around to see if there are any future developments to the area that may affect you down the road – for example, if you are purchasing a home next to a vacant property, try to find out if the owner is planning on developing that property in the next few years. Construction noise every day of the week can sap the enjoyment of your new home fast. In the same vein, check regarding upcoming road work in the area that could turn your street into a busy shortcut, or other similar development projects that may otherwise affect your day-to-day life in your new home.