What You Should Avoid When Buying a House: 8 Common Mistakes for First-Time Buyers

Buying real estate may seem exciting and fun but can be highly stressful for a first-timer. For many people buying real estate for the first time, they are making the first biggest investment of their life. This can cause a fair bit of anxiety and make some homeowners ponder upon what they should avoid when buying a house. Without investing your time and money properly, you can end up making mistakes that will cost you thousands of dollars worth in damages. To ensure you are spending smartly on your new house and don’t end up emptying your savings account, here are a few common mistakes you should avoid as you make your first home purchase or consider investing smartly for your second or third house.

What Should You Avoid When Buying a House?

Mistake #1: Not Checking on the Home Inspector Properly

Buying a house can make you extremely stressed and nervous. Most people tell stories about having knots in their stomachs and questioning themselves if they were making the right decision through the purchasing process. Since the process is extremely lengthy and time-consuming, many don’t pay attention to who their home inspector for the new house is. The home inspector is responsible for checking the amenities of the house and inspecting any damages to the property.

Looking for an unbiased and observant home inspector is highly recommended as they can help you get a better bargain or show you if the house you have chosen is not right for you. When you negotiate the price down for the house due to pending repair work, you can easily find a financial solution to pay for much-needed renovations and repairs.

Mistake #2: Assuming Your Credit Is Fine or Assuming You Won’t Qualify for a Mortgage

Most people assume that they would not be able to qualify for a mortgage for their house. However, most people don’t consider how lending companies and banks prefer people who keep their debt-money low and pay their bills timely. Although it is good to get into buying a house with some savings, you do not need to save up tens of thousands of dollars for your house’s down payment.

On the other hand, some people overestimate their credit score and believe that it would be able to get them a good deal on the house. However, that is not true. People with higher credit scores receive the best mortgage rates. Hence, to ensure you save on long-term interest payments, you need to stay on top of your credit score. You can check your credit score for free on annualcreditreport.com every week.

Mistake #3: Underestimating the Costs That Come with Home Ownership

When you become the owner of your own house, it is up to you to make all repairs and renovations yourself. These expenses need to be budgeted beforehand. You will also need to set some income aside for property taxes, homeowners insurance premiums, and your monthly loan payment. If your down payment was significantly less (less than 20%), you would also have to pay for private mortgage insurance. On top of that, you will have to fulfill the utility bills, homeowners association fee, and small maintenance expenses around the house.

Mistake #4: Not Reading the Fine Print on Your Contract

When the closing day comes, many people become overwhelmed with the paperwork and want to sign away everything quickly. However, the anxiety of signing away your life away should not make you forget to read the fine print of your contractual agreements. Although some closing professionals may seem dissatisfied or antsy as you read through the contracts, understand that noticing the minute details can help you save thousands of dollars and protect yourself. Even though you might not be able to catch everything in the document, you should be thorough to the best of your abilities and read them carefully.

Mistake #5: Expecting the Home Warranty to Cover It All

When you buy an older house, some professionals add in a Home-Warranty service for a specific period for free. Although it may make you feel more confident about your purchase after investing most of your savings for the house, it is not the most useful thing. Home warranties can be helpful, to an extent, but you cannot expect these warranties to work all the time. For more expensive repairs, you will have to invest the money yourself or strike a deal with the owners of the house.

Mistake #6: Assuming That a Big Down Payment Is Needed

The house’s down payment is a huge hurdle that keeps many people from investing in real estate. However, contrary to popular belief, you can remove this hurdle as a first-time homeowner by using down payment assistance and a zero-down mortgage. A USDA loan and VA loan can help you with a zero-down payment.

Mistake #7: Not Having Enough Savings

Although you qualify for a mortgage from the bank and with a lower amount of down payment, you will also need some money in your savings account for the bank to qualify. Some lenders will want to see a substantial amount of funds in your account. This amount of funds is called cash reserves and can be used any way you like after the loan closes.

Mistake #8: Making Emotional Decisions

The home buying process can be very stressful, and you will encounter many unexpected situations along the way. You may be outbid for your dream house by other buyers and investors, and your budget would need readjusting along the way. However, you must understand that it is all part of the process, and you need to keep a cool head. If you discover you need to save more money to be able to afford a house, you can feel dejected, but you should take your time in the process.

Wrapping Up!

Purchasing a house the first time can be daunting. If you want to ensure that you get the best deal for your house, you need to invest in the services of a reliable real estate agency. The Wall Team can help you buy and sell your dream home at the most affordable prices.