Steps to buying a house for the first time. First-time Home Buyer Mistakes to Avoid.

Buying your first home comes with many big decisions, and it can be as scary as it is exciting. It’s easy to get caught up in the whirlwind of buying a home and make mistakes that could leave you with buyer’s remorse later. We provide you with steps to buying a house for the first time. Here are common first-time home buyer mistakes, along with first-time home buyer tips on how to avoid them:

Buying Before Education

If this is your first go-round as a home buyer or it’s been awhile since you last purchase a home, knowledge is power. Understanding the steps to buying a house for the first time along with knowing what issues to avoid will help you avoid making mistakes. It’s important to learn first-time home buyer tips from the pros so you know what to expect and what questions to ask. Mistakes cost money, so sign up for one of our classes and the process will go much smoother!

Looking for a home before applying for a mortgage

Many first-time buyers make the mistake of viewing homes before ever getting in front of a mortgage lender. Demand for affordable housing is competitive so getting your ducks in line (pre-approval) is where you must start. If you are not pre-approved, then you cannot buy a home unless the money tree has dropped a bundle in your lap. See the pre-approval page to understand all the reasons this is recommended as Step #2.

Buying more house than you can afford

It’s easy to fall in love with a home that might stretch your budget, but it is never a good idea to overextending yourself and be “house poor”. You’ll also have less wiggle room in your monthly budget for other bills and unexpected expenses. Just because you can qualify for a $400,000 loan, that doesn’t mean you can afford the payment, but may not want it. This is where doing a budget of all your expense is a great idea. Know how much of a house payment you can afford.

Moving too quickly

Buying a home can be complex, and the biggest mistake that I see first-time buyers make) is to not plan far enough ahead for their purchase. Rushing the purchase could mean that you needed more time to save, get educated, fix credit to boost your credit score or buying the first home that you see. Take your time – it will be one of the best decisions that you make.

Draining your savings

Spending all or most of their savings on the down payment and closing costs is one of the biggest first-time home buyer mistakes. It costs money once you move into your new home. Things like paint, new carpet, appliances, BBQ grill, lawnmower, moving truck and many more are expenses you have as a new homeowner.

Being careless with credit

Lenders pull credit reports at pre-approval to make sure things check out and again just before closing. They want to make sure nothing has changed in your financial picture. Buyers, especially first-timers, often learn this lesson the hard way. This is why its important to understand the steps to buying a house for the first time.

Keep your credit status quo from pre-approval to closing. Don’t open new credit cards, close existing accounts, take out new loans or make large purchases on existing credit accounts in the months leading up to applying for a mortgage through closing day.

Fixating on the house over the neighborhood

A big mistake, is wanting a home that checks off the items on your wish list and meets your needs. Do a neighborhood review – come by early, come by late (riff raff comes out at night), and talk to the neighbors.

How far is the bus stop? How far is the commute? How are the schools?

Cosmetic blemishes can be fixed, but you cannot pick your home up and put it in a new neighborhood. You could wind up loving your home but hating your neighborhood if you skip this step.

Making decisions based on emotion

It is hard to take emotion out of buying a home. But it is a major life event and you need to ask questions and make smart decisions based on facts. Emotional decisions could lead to overpaying for a home and stretching your budget beyond your means.

Just remember not to become emotionally attached to a home that is not yours.

Assuming you need a 20 percent down payment

Needing a large down payment is a myth. In some home markets saving 20% down and avoiding private mortgage insurance is very difficult to do. FHA allows 3.5% minimum down payment; Conventional is 3%, VA is 0% and USDA is 0%.

Home values have been increasing while you delaying your home purchase to save up a large down payment. In most cases, buying the home with minimum down, paying PMI and saving for retirement may be a smarter option.

Plus, we can check to see if you qualify for the Washington State housing assistance programs designed for first-time buyers.

Waiting for the ‘unicorn’

Unicorns do not exist in real estate, and finding the perfect property is like finding a needle in a haystack. Looking for perfection can narrow your choices too much. You might pass over solid contenders in the hopes that something better will come along.

Have a Plan B: That means you may not be able to afford an area or cannot find the perfect home. You must be ready make choices, like a different area, smaller home or lot, fewer bedrooms, 2 cars versus 3 car garage or others.

Looking for perfection might limit your real estate search or lead to you overpaying for a home. It can also take longer to find a home.

Overlooking FHA, VA and USDA loans

First-time buyers might be cash-strapped and if you have little saved for a down payment or your credit isn’t stellar, you might have a hard time qualifying for a conventional loan.
We can help you consider other loan programs like the Federal Housing Administration (FHA loans), U.S. Department of Veterans Affairs (VA loans) and U.S Department of Agriculture (USDA loans). Go here to see the details.

The hidden costs of home ownership

If you had sticker shock from seeing your new monthly principal and interest payment, wait until you add up the other costs of owning a home. As a new homeowner, you’ll pay for property taxes, mortgage insurance, homeowners insurance, hazard insurance, repairs, maintenance and utilities, to name a few.
Remember the budget? There are maintenance and repairs that you have when you own a home. Make sure your budget has some cushion in it to cover these expenses.

Not lining up gift money

Many loan programs allow you to use a gift from a family, friend, employer or charity toward your down payment and/or closing costs. Not sorting who will provide this money and when, though, can throw a wrench into a loan approval. Understanding the process of how lenders source gift funds prior to receiving the money is very important.

Steps to buying a house for the first time

Register for one of our classes to learn about the steps to buying a house for the first time and avoid these mistakes.  Knowledge is Power!