{"id":31753,"date":"2023-10-19T08:04:45","date_gmt":"2023-10-19T08:04:45","guid":{"rendered":"https:\/\/innodebt.com\/news\/avoid-these-first-time-homebuyer-mistakes\/"},"modified":"2023-10-19T08:04:48","modified_gmt":"2023-10-19T08:04:48","slug":"avoid-these-first-time-homebuyer-mistakes","status":"publish","type":"post","link":"https:\/\/innodebt.com\/?p=31753","title":{"rendered":"Avoid These First-Time Homebuyer Mistakes"},"content":{"rendered":"
\n

Few things compare to the thrill of buying your first home. It\u2019s an exhilarating experience – whether you\u2019re buying a condo, townhouse, McMansion, minimalist, simple-sized home, or something in-between.<\/p>\n

But if this is your first rodeo, it can be almost overwhelming trying to dot all of the i\u2019s and cross all of the t\u2019s. While first-time home seller mistakes are also pretty common, at least these individuals have the experience of buying a home.<\/p>\n

These are some of the first-time homebuying mistakes to avoid.<\/p>\n

Rushing the Process<\/h2>\n

We get it: there\u2019s a major shortage of available homes in the U.S., so when you see one that you like, there\u2019s a temptation to move at the speed of light in your quest to beat other buyers. However, JR Russell, head of consumer lending at Citi, warns against rushing into anything. Instead, he recommends moving at the pace that\u2019s right for you<\/em>. \u201cSome people in the industry may tell you that you need to get qualified or under contract \u2018immediately\u2019 in this \u2018super-competitive\u2019 market, but it’s much more nuanced than that.\u201d Yes, the market is competitive, but you don\u2019t want to rush and make mistakes that you\u2019ll later regret<\/p>\n

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Making Your Finances an Afterthought<\/h2>\n

First-time homebuyers make a lot of missteps in this area. For starters, Saud Rai, broker associate and team leader of the Skywalker Group of The Keyes Company in Homestead, FL, says not securing pre-approval is one of the biggest mistakes you can make. \u201cNot having a pre-approval secured means you are not ready to make an offer – even if you find your dream home,\u201d he warns. In fact, Rai says you\u2019ll be wasting your time and effort, and you\u2019ll hinder your ability to compete with other buyers. \u201cAlso getting pre-approved will give you a complete picture of what you can qualify for.\u201d<\/p>\n

Florence Saade, realtor associate at Brown Harris Stevens in Miami, FL, agrees, adding that some first-time homebuyers don\u2019t even know what price range they can actually afford. \u201cThe amount of mortgage the bank approves is the homebuyer\u2019s true budget and the price point they should share with their realtor.\u201d And without that mortgage pre-approval and budget, she says buyers could be sorely disappointed when they fall in love with a home that isn\u2019t in their price range.<\/p>\n

Another mistake is not checking your credit score and failing to eliminate any outstanding financial issues, so pay off your other debts, and avoid making other major purchases. \u201cYou should also have proof of earnings, tax returns, and any family financial contributions on hand to support your loan approval,\u201d says Julie Jones, VP of ultra-luxury sales, and broker associate at Douglas Elliman Real Estate <\/strong>in Fort Lauderdale, FL. She also recommends applying to more than one bank or credit union and shopping around for mortgage interest rates.<\/p>\n

Confusing Pre-qualification and Pre-approval<\/strong><\/h2>\n

Sometimes, first-time home buyers think they\u2019re getting pre-approved when they\u2019re actually getting pre-qualified. \u201cThough people may think the terms can be used interchangeably, pre-qualified and pre-approved are two distinctly different aspects of the home finance process,\u201d says Matt Vernon, head of consumer lending at <\/strong>Bank of America.<\/p>\n

Pre-qualification is a step that many prospective homebuyers take before<\/em> pre-approval. \u201cPre-qualification can help you set realistic expectations when it comes to buying a house because it provides you with an estimate of how much a lender may lend you,\u201d he explains. And while being pre-qualified is no guarantee that you\u2019ll secure a loan, he says it can help the loan process.<\/p>\n

It\u2019s important to note that being pre-qualified doesn\u2019t guarantee you\u2019ll get a loan, but it can help the process.<\/p>\n

\u201cHaving pre-approval for a mortgage means the lender has examined your income, credit, and other expenses to determine the mortgage amount you may qualify for.\u201d And if you\u2019re pre-approved, you\u2019ll receive a pre-approval letter. \u201cThis is an offer – but not a commitment – to lend you a specific amount, and the offer is good for 90 days,\u201d Vernon says. The advantage of being pre-approved, compared to being pre-qualified, is that it\u2019s a more serious step, and Vernon says you\u2019ll be more appealing to home sellers.<\/p>\n

Getting Info From Family\/Friends Instead of Professionals<\/h2>\n

While you will naturally talk to family members and friends when buying a home for the first time, they may not be the best source of information. \u201cProfessionals experienced in the industry are the most valuable assets for first time home buyers,\u201d according to Saade. \u201cI start the process with a sit down to understand what the buyers are looking for in a home, and this is the time to communicate all of their needs.\u201d<\/p>\n

In fact, this process should be started sooner, rather than later. Talk to the professionals long before you start shopping for a home. \u201cIf buying a home is the goal for a year or two down the road, it costs nothing to talk with a lender to understand that part of the home buying process,\u201d says Lisa Culp Taylor, realtor and team leader at LCT Team-Parks in Franklin, TN. In addition to helping you understand the various loan options, she says they can offer advice on what you need to do to position yourself for success.<\/p>\n

Not Understanding All of Your Options<\/h2>\n

Some mortgage options are better than others, but you\u2019ll never know if you don\u2019t research the various mortgage products. \u201cAsk your mortgage professional about all options available to you \u2014 such as FHA loans or even VA loans (if you\u2019re a veteran), or first-time homebuyer programs,\u201d advises Russell. And he says a good mortgage professional will walk you through the various products and explain their features and benefits. \u201cThe amount you save from this conversation, or this series of conversations, could mean thousands more dollars in your pocket over the life of the loan.\u201d<\/p>\n

Also, there are various first-time homebuyer loans and grant programs available. \u201cMany people overlook these options when shopping for their first home because they don\u2019t know these programs exist or don\u2019t think they qualify,\u201d Vernon says. \u201cIn reality, grants to help make the cost of homeownership more affordable are available for first-time homebuyers and even for those who have purchased a home before.\u201d<\/p>\n

For example, he points to Bank of America\u2019s program, America\u2019s Home Grant, which can provide up to $7,500 to cover closing costs, or buyers can receive up to 3% of the home\u2019s purchase price (whichever is less) to be used toward a down payment. \u201cIn addition to grants from lenders, be sure to research if the city or town you\u2019re looking at offers any homebuying incentives you can take advantage of,\u201d Vernon advises.<\/p>\n

In addition, Jones recommends looking for special first-time buyer professional programs \u2013 such as those for accountants, physicians, attorney\u2019s, etc.<\/p>\n

Failing to Budget for Closing Costs or Surprise Expenses<\/h2>\n

While first time buyers know to budget for the down payment, they may overlook closing costs. \u201cIt\u2019s important to budget for 3% to 5% of the total cost of the home, or the amount you\u2019re borrowing from the lender to purchase the home,\u201d advises Vernon.<\/p>\n

Also, according to one survey, homeowners pay nearly $15,000 in hidden costs. \u201cIn addition to upfront costs, you should be prepared to face additional costs for repairs and maintenance,\u201d he explains. For example, you may need to repair or replace such home components as plumbing, electrical, heating and cooling \u2013 or even your roof.<\/p>\n

You\u2019ll also want to avoid any surprises in your monthly payments. \u201cInsurance and taxes will probably change, so do not rely on the current costs,\u201d warns Jones. She recommends aligning yourself with a good insurance agent to avoid last minute surprises.<\/p>\n

Settling for a Home That May Not Work<\/h2>\n

In the rush to find a home, don\u2019t make the mistake of putting an offer on anything that\u2019s available. Despite limited inventory, it\u2019s usually better to wait for the home that has the majority \u2013 if not all \u2013 of your \u2018must-haves,\u2019 and falls within your budget,\u201d says Russell.<\/p>\n

Jones agrees, and recommends looking carefully at the floorplan to ensure the home matches your lifestyle. \u201cIt may not be your forever home but it should serve your purposes for at least three years.\u201d<\/p>\n

However, you\u2019ll also need to balance what you want and what you need. \u201cDon\u2019t make the mistake of thinking of a first home as a life-time home and have a huge list of priorities,\u201d Taylor says. She warns that this will set you up for disappointment.<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Few things compare to the thrill of buying your first home. It\u2019s an exhilarating experience – whether you\u2019re buying a condo, townhouse, McMansion, minimalist, simple-sized home, or something in-between. But if this is your first rodeo, it can be almost overwhelming trying to dot all of the i\u2019s and cross all of the t\u2019s. While […]<\/p>\n","protected":false},"author":1,"featured_media":31754,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[38],"tags":[],"class_list":{"0":"post-31753","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-news"},"yoast_head":"\nAvoid These First-Time Homebuyer Mistakes | Innodebt<\/title>\n<meta name=\"description\" content=\"Few things compare to the thrill of buying your first home. 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