In the first part of this two-part series, we discussed a few mistakes that first-time homebuyers make when looking to buy a home. Here, at Jones Realty Group, we want to help you avoid these mistakes and make your first time home buying experience as successful as if it was your third! Here, we will discuss a few more tips on things to avoid when buying a home.
Poor or Unknown Credit Score
When you purchase a home, a lot of weight is placed on your credit score — being qualified for a home loan to the interest rate on your mortgage. A lot of people get frustrated because a credit score does not indicate how much money you have, but it does show a lender how capable you are of paying money as promised. A mortgage is typically a 20 to 30-year commitment to the lender, that you will pay your mortgage on time. A low credit score does not make a lender feel very confident, especially when the biggest amount of money previously loaned is a car and you were not always on time in paying it. Many, young, first time home buyers don’t have bad credit, but don’t have much credit at all, which to a lender means you have not sufficiently proved your ability to responsibly borrow money and pay it back as promised. Knowing what your credit score is, and doing what you can to improve it before being pre-qualified will help your bargaining power immensely.
Failing to Factor in Additional Costs
Buying a house is a huge financial obligation. One very common mistake that first time home buyers make is setting a budget and making an offer at the upper end of that budget. There are a lot of additional costs when you purchase a home, in addition to the purchase price. For instance, the bank will always get their money and the interest rate will be front-loaded onto your mortgage. Even if you are able to manage a four percent interest rate, that will add to the price of the house. At closing, there will be closing costs — which averages at two to five percent of the purchase price — which may be negotiated to be paid by the seller but don’t count on it. There will also be inspection fees as well as property tax, insurance, and potentially homeowner association fees. Maxing out your mortgage limit with the purchase price is a big mistake that will push you way over budget!
Skipping Inspections
Certain inspections are required by lenders and federal law. However, there are many home inspections available that should be conducted prior to making an offer on a home. Many first time homeowners are so excited about making an offer, they want to get to closing and pick up the keys to their new home, that they opt to waive the inspections. Sure, inspections may take a little time to schedule, complete, and receive the reports, but they are important. If the home is newer, it may have less obvious issues, but a comprehensive inspection will let you know about any structural issues that are potential money pits. Have the home inspected and negotiate to have the issues fixed before closing, or the price lowered to compensate for fixing them.
Emotional Attachment
It is not uncommon for first time home buyers to place higher bids on homes that could have been negotiated lower because they develop an emotional attachment. When you look at potential homes to buy, do not get swept up in the emotion of it. Sure, you can picture where all of your belongings may fit and daydream about how the added office or third bedroom may lead to more children, but do not let those things cloud the reality of the house that you intend to purchase. By this same token, do not develop emotional attachments to minor aesthetic upgrades that were done to cater to these desires. A yellow nursery or farm style lighting fixtures are inexpensive and can be added to any home, so don’t let them sway you into purchasing a more expensive home!
If you are a first time home buyer, it is easy to get excited and make some of these common mistakes. Most of these mistakes are non-fatal and will only lead to you spending unnecessary money, but they are completely preventable. At Jones Realty Group, we understand what a significant life event buying a home is, whether it’s your first home or your forever home. Our experienced real estate agents will help guide you through every step of the home buying process. Give us a call today.
