October 19, 2015
The list of mistakes, both big and small, that first-time home-buyers make is a long one. No buyer, no matter how knowledgeable, is immune to all of them. But the following six are among the most common, and they can all be avoided largely just by being aware of them – and exercising some self-control and common sense when the excitement of the moment takes over!
It’s such a temptation when you’re eager to be a homeowner to say forget about the inspection. Inspections can be a downer, uncovering expensive repairs, throwing a monkey wrench into the closing date, re-opening negotiations with the seller. But buying a house without truly knowing the shape it’s in is a recipe for disaster. And often only the trained eye of a home inspector can see the really serious issues or flaws. Even if the inspection is time-consuming and inexpensive, causes delays, and may complicate the deal, it’s not something you can skip.
Every real estate agent has disappointing stories of clients who decided a particular home was perfect for them, only to discover later that they couldn’t qualify for a mortgage that would cover the purchase. Whatever your credit score or income, it’s essential to get pre-approved for a loan before placing an offer on a home. That way you can avoid wasting everyone’s time, including the seller’s, the brokers’, and your own. If you’re shopping without a pre-approved mortgage, you in essence have no real sense of what you can afford. Veteran real estate professionals have a saying: home-buying doesn’t begin with looking at houses, it begins with getting pre-qualified for a mortgage.
Many first-time buyers have looked at so few properties in their lives that, when shopping for their first house, they get caught up in insignificant and irrelevant details – the color of the seller’s drapes, too-loud wallpaper in the dining room, or the fact that the kitchen is cluttered with the seller’s toys. They forget that they have to look beyond all this at the bones of a house – its overall condition, location, floor plan, and value. Cosmetic fixes and inexpensive repairs are easy. Also, it’s a mistake to be too picky. You can have a “wish list” of 50 features you want in your first home – but the home, in your price range and desired location, that has all 50 features does not exist. Home-buying, like so many things in life, requires compromise.
Reputable real estate agents, expert loan officers or brokers, experienced real-estate lawyers – all these people all partners in the home buying process. It’s a classic amateur error to try to do-it-yourself. The complexities of residential real estate sales these days almost always make that a fool’s errand. Make sure you buy your first home professionally – and correctly.
With a 20 percent down payment, most conventional mortgages waive the requirement of having mortgage insurance – which can be expensive. Because of this, many first-time buyers will struggle to put together the 20 percent down payment and use up all their savings – leaving them cash-poor in a new house. This is never a good position to be in. Better to put down 15 percent, pay for the mortgage insurance, and leave yourself the cushion you’re sure to need.
It’s surprising how many people don’t return to the house they’re planning on buying several times before actually closing the deal. Have you seen the house at night? On weekends when children are playing? When traffic is heavy? Do you have any sense of the kind of neighbors you’ll have? Falling in love with a house at first sight is great. Now spend some time to getting to know it before submitting an offer and there’s no turning back.
No buyer does everything right, and in retrospect you can always point to “coulda woulda shoulda” things you might have done differently. However, you can at least be aware of the major, avoidable mistakes up front. It’s still true -- buying a house is, for most people, the single largest investment they’ll ever make. The fewer errors you make along the way, the better.