Buying a new home can be stressful, but we are here to help simplify the process. Here are the mistakes you need to avoid.
A recent study found that 47% of all buyers are first-time home buyers. First-time home buyers tend to overlook certain steps of the process which are important and crucial to buying a home. So what are a few common mistakes first-time homeowners make, and how can they be corrected?
Don’t worry! We’ve reviewed everything you need to know about buying a new home. That way, you know what to do and what not to do.
Now, are you ready to get started? Here’s an in-depth look at common mistakes during the home-buying process:
Not Getting Pre-Approved
Getting pre-approved is the first thing you’ll want to do when starting the home-buying process. After all, you don’t want to find a home you love and not have the loan approval amount; it will delay the process and be frustrating for all involved.
Get pre-approved ahead of time; that way, you know the loan amount; plus, it shows realtors that you are a serious buyer. As you know, the market is competitive for buyers, so a pre-approval letter will make you stand out as a qualified buyer.
Not Hiring a Real Estate Team
When you start the home-buying process, you might be tempted to forgo an agent and real estate attorney to save money. However, that will be a mistake, especially if you know close to nothing about real estate law.
A real estate agent can help you navigate listings and complex property negotiations. Whereas a real estate attorney will help you with needed paperwork and asses the house’s value and previous sales.
Plus, their fees are usually covered in your mortgage with your closing costs, so you won’t have to pay out of pocket for their services. An agent and attorney are needed for you to get the best sale. They provide certain benefits you’ll want, like:
- Networking with other agents to find new and upcoming listings
- Negotiating offers
- Completing a title search
- Handling important paperwork
- Handling purchase and sales agreement review
- Handling closing paperwork and deeds
Forgetting to Assess the Neighborhood
The neighborhood you’re planning to live in is more than its shops and cafes. You need to consider what you want a neighborhood to have and look for neighborhoods that best suit those wants.
For example, if you want to have children in the near future, look for a neighborhood with a good school district, plenty of playground space, and ideal for raising children. However, if convenience is important to you, look for a property that is near public transportation, your work, or around popular shops. You don’t want to purchase a property only to find out that it’s not suitable for raising kids or isn’t convenient to do the activities you want.
Also, consider the noise score, walkability rate, and population number. You need to assess the house you’re viewing and the neighborhood as a whole to see if it’s a good fit for you and your family.
Not Understanding the Full Price of Home Ownership
As a first-time home buyer, you’re probably used to the cost of renting, which typically includes your rent payment, utilities, and your internet bill. However, homeownership is a different type of beast.
You’ll have more monthly costs, plus large unexpected costs and, on top of that, various moving expenses. These costs often include the following:
- Monthly mortgage payment
- Homeowners Insurance
- Title insurance
- Property taxes
- Yearly maintenance
- Homeowner Association fees
- Monthly utilities
- Monthly landscaping fees
- Monthly garbage and sewer bills
- New furniture
- Movers and truck rentals, if needed
Forgetting to Include Conditions In an Offer
Conditions protect you from committing to an offer before you know the facts of the property. That way, you know what you’re buying into.
However, ensure that your conditions are fair and within reason. After all, you don’t want to give any unreasonable conditions and risk getting rejected by the seller. So ensure that your conditions are within a realistic and acceptable time frame.
Your agent will help you figure out what conditions to include in the offer, but the most common include the following:
- A house inspection
- Sale of your current residence
- A list of who pays which closing costs
- Survey of the land
- An exact closing date
Spending Your Entire Budget
When you get pre-approved from a lender, they will generally include the maximum amount they are willing to give you. However, just because a lender can give you a certain amount doesn’t mean you should spend it all; remember the 28/36 rule.
If you haven’t heard of this rule, it states that homeowners should spend no more than 28% of their monthly income on housing and no more than 36% on debt. After all, buying a home comes with many upfront costs like a down payment, closing costs, and agent fees, so you’ll want to save some of your money to pay for those costs, plus any unexpected emergencies.
Use These Tips When Buying a New Home
Buying a new home is difficult when there are so many pitfalls to avoid. First, you need to get pre-approved from a lender, hire a real estate team, and asses the neighborhood. Then budget smartly when realizing the full cost of ownership, and include fair conditions in the offer.
If you follow these home-buying tips, you’ll sign your closing papers in no time. Contact us today to hire a real estate attorney, and we will help you as soon as possible.