First Time Home buyers Mistakes
Right now, the US housing market has yet to fully recover from its peak in 2006. Yes, things are healing quite nicely in many markets with some decent price appreciation, but the costs of buying a home are still very affordable. Between low home prices and favorable interest rates, this is a great time for first time home buyers to get into the real estate game.
But, becoming a first time home buyer can be a daunting decision. These are just so many complexities that jumping in at the wrong time might not be the best decision. Instead, it’s much wiser to be prepared for the ups and downs of home buying.
Getting into the market when you are certain it’s the right time is one of the best moves your can make as a first time home owner. When the time is right here are seven common mistakes made by first time home buyers that should be avoided at all costs.
Not Getting The Right Real Estate Agent
When you set out to buy your first home one of the top priorities should be finding a Realtor you are comfortable working with. The agent should have some experience and be competent enough to answer questions pertaining to buying and selling homes. Never under estimate the important of having a good agent. Just like any other business this really matters. You wouldn’t just hire any doctor to operate on you would you? Buying a home is a very large investment. You want to have someone in your corner that is a real pro! Here is a neat info-graphic that summarizes the importance of a real estate agent. You will realize this is great advice the moment you pick any ole real estate agent to work with you and find yourself in a tough spot where a great agent would be welcome.
Not Considering Renting May be Better Decision
Home ownership has long since been the American Dream. But, that same dream had thousands of homeowners facing foreclosure just a few years ago. So, be wise. Weigh your options. If the costs of owning a home are unaffordable or not feasible for you at this time, continue renting until you’re ready.
If you are going to make the leap into home ownership you want to be aware that you costs are not just principle, taxes and insurance but also the day to day expenses of owning a home. Buyers should always have emergency funds available for those occasions where financial difficulties arrive. As Kyle Hiscock, a New York Realtor points out in his first time home buyer advice, understanding your complete financial picture is an important element before jumping in and looking at properties. It doesn’t make a lot of sense to be a fiscally irresponsible home buyer. Buying a home is one of the biggest financial decisions you will make in your lifetime.
Not Prepared for All-Cash Competitors
In expensive, competitive markets, such as the San Francisco Bay, Los Angeles and New York City areas, all-cash offers are very common. That’s because they almost guarantee potential buyers’ winning bids. As a first time home buyer, be prepared for this competition by being well educated on the current market. Above all else make sure you have your finances in order. Make getting a pre-approval letter from a lender one of your top priorities.
Not Taking DTI Seriously
DTI stands for debt-to-income ratio. It’s one of the very first things your lender will investigate when assessing your mortgage borrowing power. So, if you’re planning to buy a home in the near future, do not pick up any new debts, especially unaffordable ones. Many buyers have made the mistake of going out and finding their dream home while also deciding to purchase a car. When the lender finds out you have done this you could be facing the fact you might not get the loan. So be smart with your finances when purchasing a home.
Not Working with Lenders in Person
Starting your search for mortgage information online is okay. But, this should not be your last stop when shopping for mortgages. You need to personally work with a lender in order to get a full line of mortgage options, such as FHA loans and VA loans, as well as any local first time buyers programs that may exist. Do your home work on choosing a lender to work with. Not every lender has the same rates or even the same loan programs. Ask around with family, friends and your Realtor on who they would recommend to work with for financing.
Not Getting a Home Inspection
Finding the “perfect” home can be very exciting. But, don’t get too carried away. You still need to protect yourself by investing wisely. Oftentimes, first time home buyers try to cut costs by skipping the home inspection. Having a home inspection is for your own protection. There are lots of qualified home inspectors that a Realtor can recommend that will look for defects in the property. Not having the home inspected by a professional could result in thousands of dollars worth of defect damages later on down the line. This could easily become a first time buyer’s nightmare, just to save around $500. Here are some examples of home inspections problems that would be real problematic to deal with after purchasing a home. Not only could they be expensive to remedy but also affect your health and well being.
Skipping home inspections has become quite common in areas where the market is booming as buyers are doing everything they can to win some of the crazy bidding wars that are taking place. Unless you are 100 percent certain there are no major defects in the property, skipping a home inspection is a big mistake!
Not Leaving Negative Emotions at the Door
The current market trends are leading to sellers receiving multiple offers on their homes. Not all of them allow the highest bid to make the final decision. Oftentimes, sellers will choose the buyer who seems to have the most love for the property. Smart buyers are even using emotion as a tool to win over the seller. Hand written letters are delivered by the buyers agent explaining how much the buyer loves the property and the years of enjoyment they can see ahead with their family. Buyers who come in complaining, adding unreasonable terms into an offer and having a generally negative attitude tend to get passed over. When buyers do this they make it easy for a seller to choose the best real estate offer for them!
Not Understanding How Home Value Appreciation Works
Many first time home buyers invest their entire life’s savings into buying a home. These buyers hope to make a hefty profit on the property’s appreciation within just a few years. But, a home is not a very liquid investment. It will take time to appreciate. So, be sure you’re investing for the long haul as a first time buyer. If the last ten years is any indicator you should be buying a home for the use and enjoyment. A place of shelter for you and your family. Not your ticket to paradise and ultimate wealth. More than likely those days are gone for a while.
Other Excellent First Time Home Buyer Articles
- How to buy your 1st house via Great Colorado Homes.
- Why it is important to be fiscally responsible when buy a first home by Veterans United.
Use these additional resources to make sound decisions when buying your first home. Research and education provides a great way to go in with your eyes wide open when purchasing your first home.
The best first time home buyer tips come courtesy of Jackson Cooper who is an agent with Jensen and Company. You can visit their website at JensenAndCompany.com for all of your Park City Real Estate needs. Jackson loves working with first time home buyers and would love to share his expertise.
These are all great points that unfortunately happen way too often. A buyer will make one or sometimes a combination of these mistakes and then it will cost them either in terms of money or by not getting the house they wanted. Thanks for sharing Bill!
They are all good points. I recommend walking around the neighborhood and parking at least 5 houses away when viewing new properties. Buyers should not isolate the home from the neighborhood as they often do (using online pictures and agent descriptions, being micro focused on prices). You can not move the house, but you can invest sweat equity.