10 Rookie Home Buyer Mistakes to Avoid
Get the most from your purchase by sidestepping these costly pitfalls
1. Not checking your credit report and score
You’ve clicked through hundreds of online listings, compared floor plans and square footage, and are eager to jump-start your search. But before you even think of setting foot in an open house, make sure you get a copy of your credit report. The cleaner your credit report and the higher your credit score, the more likely you are to be preapproved for a mortgage at a low interest rate.
Review your credit report a few months before you begin your house hunt, and you’ll have time to ensure the facts are correct and dispute mistakes before a mortgage lender checks your credit. You can access a free copy of your credit report at annualcreditreport.com once every 12 months.
Need a credit make-over? Learn how to boost your credit score.
2. Not getting preapproved
After you’ve assessed your credit report, it’s time to establish with a qualified lender how much you can afford. First-time home buyers need to take the time to get an approval from their lender before looking at homes, this includes getting a credit check and giving their lender a copy of W-2s, pay stubs, and bank and brokerage statements. Getting preapproved can help you save time by looking for homes that you know you can afford instead of lusting after something out of your price range. And it will put you in a better position over another bidder with no preapproval.
3. Not creating a long-term budget
If the housing crisis proved anything, it’s that mortgages were given to people who clearly did not have the means to pay them back. To avoid making this mistake, home buyers should create a budget before even beginning their home search to determine just how much house they can really afford. A good rule of thumb is to devote no more than a third of your monthly household income to housing costs, which include mortgage principal, interest, taxes, and insurance. There are several work sheets available online to help you figure out how your income, debts, and expenses affect what you can afford each month for the next 15 or 30 years.
4. Forgetting about the hidden costs
You grossly underestimated what you can afford to pay each month. You factored in the purchase price of the home but didn’t consider the cost of taxes, insurance, utilities, and fees. There are several hidden costs that first-time home buyers neglect to prepare for. They can be anything from the closing costs to appraisal fees, escrow fees, homeowner’s insurance fees, property taxes, and even moving costs. Another factor is the cost of repairs and maintenance.
5. Not using professional help
Sure, it’s possible to go out and buy a home without the aid of a professional real estate agent. But think about how much time and stress a good agent can save you. For starters, Agents have access to all the homes on the market through the multiple listing service (MLS) plus all the ones that are under contract and have been sold. A specialist has time to sift through all of these listings and make the appointments to show you the houses, create comparative market analyses to determine proper pricing, and meet with necessary inspectors.
Real estate agents also can help buyers traverse a taxing, 70-page legal contract. Someone who knows the contracts, who has experience negotiating, and who can walk you through the entire process smoothly—step by step—helps guarantee you get the house that’s right for you.
Patrick Parker Realty walks you through every stage of the home buying process. We tackle each and every step of home buying – while also providing our expert guidance.
6. Picking your real estate agent and lender blindly
One of the mistakes a lot of people make is finding a Realtor they aren’t comfortable with. Begin your search at the National Association of Exclusive Buyer Agents, a nonprofit that represents buyers. Or ask relatives, friends, neighbors, and coworkers for referrals.
First-time home buyers are generally more time-consuming than the average buyer and require more attention. Patrick Parker Realty Agents are experts in helping first-time home buyers. Our core values extend into offering friendly and accommodating service. We show only homes that fit buyer parameters, and help with strategies during the bidding process—a huge and complex component of the buying process.
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Similarly, buyers should feel at ease with and have complete confidence in their mortgage lender, and they should fully discuss and understand their financing options with that lender. Don’t apologize for asking questions, the importance of knowing what you’re getting into is critical. There’s a pretty substantial chunk of people who are in really rough straits right now and would not have been had they done their homework. Patrick Parker Realty has a network of Mortgage Brokers and Lenders we can recommend.
7. Thinking you’ll get everything on your “wish list”
Another mistake people make is being too close-minded while searching for their home. Sit down with us before searching for a home and creating a need/want list. Some of the items you might want to include as “must haves” or deal breakers are the towns you’d want to live in, square footage, or accessibility to transportation. The second part of the list would be things you don’t necessarily need but wish to have, such as a garage, new kitchen appliances, or an extra room for an office. Understand that a certain amount of flexibility is essential. Your aim is to be able to afford everything you need—as well as some items you want—all while staying within a long-term budget.
8. Not keeping your feelings in check before hiring a home inspector
You’ve already chosen the perfect paint color to match your living room set. But hold on: Before you start picking out accent pillows for your sofa, you need to bring in a home inspector to check the safety of your potential new home. Inspectors will evaluate the structure, construction, and mechanical systems of the home and will give you the approximate price of repairs that may be needed. They will examine everything from the electrical system, water heater, and HVAC system to the foundation and floors. Patrick Parker Realty has a network of Home Inspectors we can recommend.
Buyers should find and hire their own inspector—independent of the seller’s real estate broker—to ensure there isn’t a conflict of interest. When you make your offer, make sure the seller is aware that your offer is contingent on the house passing inspection. You can also add a clause to the contract stating that the seller will pay up to a certain amount for any repairs required as a result of the inspection.
9. Not researching your neighborhood
You may be living in your dream home, but your neighborhood’s a nightmare. Or you may have children or are planning to have children in the near future, but you didn’t consider the quality of the school districts or parks in the vicinity. You should ask yourself a number of questions during your home search, such as “Are there good schools nearby?” and “Do I feel safe coming home at night?”
If schools are an important factor, you should go check them out personally. Speak with the principals or the parents waiting on the steps outside to pick up their kids. To learn more about the community, open up the local newspaper. You can find out about community events or even how good the local high school football team is. Today’s buyers can gather all sorts of neighborhood information from real estate blogs and websites like Zillow and Trulia. You can also use this handy neighborhood research tool from Neighborhood Scout.
Remember, real estate is local, you need local expertise. Patrick Parker Realty experts know the communities where you’re searching because we don’t just work here… we live here.
10. Not considering the resale value of your home
You’ve just started the home-buying process. The prospect of selling a home hasn’t even crossed your mind. Besides, you’re thinking you might live in whatever home you buy forever. Yet life is full of surprises, whether it is a job transfer or having another child or taking care of an incapacitated relative.
When the time comes to put your house on the market, will your home be easy or difficult to sell? While you’re on the hunt, it’s a good idea to account for preferences of the typical home buyer. Just because you love to landscape or enjoy a bright-pink backsplash doesn’t mean a prospective buyer will.
We understand key buyer preferences and can help you envision the full future of your home purchase.