While first-time homebuyers are enthusiastic about their first home purchase, their lack of experience can cause them to do certain things that homebuyers should never do, which makes for a stressful purchase or, in some cases, no purchase at all. To prevent this from happening, here are 7 things that a first-time homebuyer should never do if they want their first home purchase to be a smooth and pleasant experience.
- Neglect your credit
Between the student loans, new cars, and credit cards, your credit score can easily get out of control if you’re not careful. Before you even think about home shopping, get a copy of your credit report and see where you stand. This alone will help you get a better idea of the home you will be able to afford and the loan you will be approved for. In some cases, it may be a good idea to take a little time to pay off outstanding debts to raise your credit score before trying to purchase a home.
- Not do research
Choosing the right real estate agent and lender can be difficult, so it’s crucial that you don’t choose blindly or without thought. Nowadays, the Internet is a great tool for prospective home buyers in that they can learn everything about an agent or a lender before they even have to pick up the phone to call them. Read reviews, closely examine the services they provide, and even ask people around the area to see if they have heard good things.
Furthermore, doing research on your own needs is important as well. Going in with an understanding of your own expectations for cost, rates, and service helps everyone involved, including the agents and lenders. They will be able to better assist you if you know what you want and expect from them.
- Skip pre-approval
While getting pre-approved is a smart choice to make before home shopping, it can do more than just let you know what kind of house you can afford. It can actually legitimize your bid on a home, especially if that home has one or more bidders that haven’t been preapproved by a qualified lender. A seller is going to view your bid as more valuable since you have the lender and approval to back it up.
- Take the plunge without a budget
Before choosing a home, it is wise to pause and take a look at your own personal finances in-depth. You may be able to physically afford a $300,000 mortgage, but doing so may leave you strapped for cash at the end of the month.
When you start deciding how much you’d like to pay for a mortgage, make sure you consider all of your expenses. Don’t just consider your basic monthly bill obligations like keeping your lights and cell phone on; go a step further and take into account things like groceries, gas, and even entertainment. Don’t forget to designate money for savings and a rainy day fund as well.
- Go in with unrealistic expectations
Nothing is worse than taking months and months to tour houses and spend afternoons with realtors only to discover that you can’t seem to settle on a home within your budget. It is important to realize that you are probably not going to get everything you want in your first home, or in any home for that matter.
To avoid going in with standards that are too high, sit down and make a list in two parts. One list is your “must haves” which will include anything that you absolutely need in your home. That could be a safe neighborhood near good schools or enough square footage to suit your big family. On the other hand, make a list that contains all of the things that you would like to have but don’t necessarily need such as a two-car garage or a renovated kitchen with brand-new appliances. Managing your expectations will help you stay in your budget and leave you happy with the home you have chosen, even if it’s not 100% perfect.
- Turn away professional help
Representing yourself in a courtroom rather than working with an attorney may be possible, however it’s rarely a good idea. The same is true when shopping for a mortgage. It’s possible to minimize the amount of help you receive, however it’s not advised if you want the best mortgage and a timely closing.
Working with a realtor means that they have access to more listings than you ever could along with the time to sift through all of them. As far as lenders go, they are experts in the mortgage industry and know the ins and outs of all different kinds of mortgage programs and little secrets that you probably would never think to take advantage of otherwise.
- Not consider resale value
If this is indeed your first home, it’s unlikely that you will stay there for the full 15 or 30-year mortgage term. A lot can happen in 15 years, and you may need to upsize for a family or move for a new job. Either way, thinking long-term is key when purchasing a home. You may love having an alligator pond behind your house or the nostalgic feel of your childhood home that the 70’s shag carpet gives you, but that doesn’t mean that the next buyer will. You should always consider whether or not the home will be easy or difficult to sell in the future.
While these are common mistakes that many first-time homebuyers make, they are easy to prevent once you have the proper education and guidance to help you achieve your home purchase. Morgan Financial is here to give you that guidance, so give us a call when you’re ready to start the journey to homeownership!
If you are still renting and have yet to discover what homeownership can provide, click here to read about the many benefits of homeownership.
