As the spring season draws closer, the real estate market prepares for the waves of home buyers that will decide they are ready to begin their home search. As we reported last year, there will be a new generation of first-time home buyers entering the market in 2017. There are a lot of mistakes that first-time home buyers can make throughout the home buying process when they’re unprepared, uniformed, or working with an inexperienced agent. Thankfully, the Keri Shull Team has a variety of resources available for our past, current, and future clients to learn everything there is to know about the home buying process. We want all first-time home buyers to be successful, so we’ve also put together a short guide for avoiding some of the most common mistakes first-time home buyers make during the home buying process. Give yourself an edge on the competition this year by being as prepared as possible.
Here are five mistakes first-time home buyers commonly make and how to avoid them:
#1: Choosing a Not-so-Great Real Estate Agent
This is one of if not the biggest mistake first-time home buyers can make during the home buying process! Choosing a real estate agent who has bought and sold dozens of homes each year, who knows the area you want to buy in well and has your best interests at heart is imperative for any home buyer, let alone a first-time home buyer. You may be tempted to do it alone, but know that there is a lot to learn to be successful in the real estate industry. A great real estate agent or team will make the whole process easier for you and get you access to listings you wouldn’t find on your own. Avoid real estate agents with discounted commissions. Work with someone you can trust who has the resources to help you be a successful first-time home buyer in the current market.
#2: Forgetting to Vet Mortgage Lenders
We get it. All of this research isn’t the most fun thing to do, but we promise it will be more than worth it when you start your home search as a first-time home buyer. Don’t make the same mistake many home buyers make when they choose a mortgage lender without properly vetting them first. There are a lot of untrustworthy lenders out there who prey on first-time home buyers with the Bait and Switch tactic. Do your research and find a mortgage lender you can trust to give you a fair rate and set a loan within your budget. Avoid hidden fees and surprise rate hike whens you sit down at the closing table. A great real estate agent will be able to refer you to a first-rate mortgage lender and help you protect your finances.
#3: Not Getting Pre-Approved for a Mortgage
Some first-time home buyers forget to vet mortgage lenders before getting pre-approved, and some skip getting pre-approved altogether. Any real estate agent worth their commission knows that pre-approval is a key step in the home buying process. Avoid this common first-time home buyer mistake and obtain pre-approval before you begin your home search. You will struggle finding a home you can afford if you don’t know exactly how much the bank will lend you. It is extremely useful for first-time home buyers to take care of the financing before house hunting in case you need to act fast to put an offer in on a home you love.
#4: Ignoring Existing Credit Issues
A bonus to getting pre-approved for a mortgage ahead of time is that you will find out valuable information about your existing credit. However, if you know you have existing credit issues, ignoring them will not help you obtain financing on a home. You need to confront bad credit head on when looking to become a first-time home buyer. Give yourself time to pay off any debts and raise your credit score if need be. Your credit score is one of the key factors affecting the terms and conditions of a mortgage. Avoid this mistake and save potentially thousands of dollars on a loan by confronting any existing credit issues before you start the home buying process.
#5: Making Assumptions About the Down Payment
So many first-time home buyers make incorrect assumptions about the down payment for a home. Avoid this mistake and get the facts from an experienced real estate agent or mortgage lender. The down payment for a home doesn’t have to be 20 percent; in some instances it can be as low as 4 or 5 percent down. The FHA recently cut mortgage insurance premiums for a second consecutive year, which helps first-time home buyers with less-than-stellar credit or limited finances afford the down payment on a home. Buying a home instead of paying rent can actually save you a lot of money down the line. There are multiple tax deductions for first-time home buyers to take advantage of and you may be surprised at how much you can really afford when you consult a professional.