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Don’t make these costly first time buyer mistakes
Don’t make these costly first time buyer mistakes
Don't make these costly first time buyer mistakes
When buying a home it is important to be mindful of the decisions you make. One mistake can cost you the dream home you have been searching for so we want to avoid any missteps. Today we will discuss the top first time buyer mistakes you want to avoid while buying a home and why they matter.
If you’re in the market for a new home, be sure to avoid these first time home buyer mistakes!
1. Settling on your first choice – Just because you’ve found “the one” doesn’t mean you can’t keep looking.
2. Not having a loan pre-approval – Lenders will give you a pre-approval letter which will show sellers you are a serious buyer.
3. Not touring all your options – You may be so in love with the first home you see that you don’t look any further.
4. Skipping the home inspection – This is probably the biggest mistake a buyer can make.
5. Over-spending on your down payment – You don’t need to put down 20% to buy a home.
6.Not considering FHA, VA or other government backed loan programs – They may just get you into the home you want
7. Not considering all the costs of homeownership – There are many costs associated with owning a home that you may not have considered.
8. Not getting a real estate agent – A good real estate agent can help you navigate the process and find the best home for you.
To avoid these first time home buyer mistakes, be sure to consult with a real estate agent and get pre-approved for a loan. Doing your homework will ensure you make the best decision for you and your family!
Don’t Settle on your first choice
Just because you’ve found “the one” doesn’t mean you can’t keep looking.
Closing on a house is an exciting time, but it can also be stressful. If you’re searching for your dream home and haven’t found the one yet, don’t settle for the first place that seems promising. As an agent who has helped buyers find their perfect homes in northern NJ for over 10 years, I’ve learned that it’s always best to understand your options before buying a home.
There are a few things you can do to make the process less stressful and more efficient. Start by creating a list of features your dream home must have and items you want it to have. This will help you focus your search and avoid wasting time on properties that don’t meet your needs. As you see more homes your list of wants and needs will change. You should also consult with a real estate agent who understands your needs and can help you find the right home for you.
Finally, be patient. It may take time to find the perfect home, but it will be worth the wait. Don’t settle for anything less than what you want – you’ll only be disappointed in the end.
Not having a loan pre-approval
Lenders will give you a pre-approval letter which will show sellers you are a serious buyer.
When you’re looking for a new home, it’s important to get a mortgage pre-approval from a lender. This will show sellers that you’re a serious buyer and could help speed up the process of getting your dream home. A pre-approval also lets you know how much you can afford, so you don’t waste time looking at houses that are out of your price range.
To get a pre-approval, you’ll need to provide the lender with some information about your finances. This includes your income, debts, and credit score. The lender will use this information to determine how much money they’re willing to lend you.
It is important to not just take that number they are willing to lend you and run. You need to account for other costs of owning a home and the cost to live your life. When you get the pre approval you should discuss what your monthly payment would be for different price points. This will help you budget but will also let you know how much increasing an offer price will cost you per month. I often tell my clients, it’s not the price of the home but the amount you will pay per month in terms of principle, interest, taxes, and insurance.
If you’re not sure where to start, talk to a mortgage broker. They can help you find the best lender for your needs and guide you through the pre-approval process.
Be patient when looking for a new home – it may take time to find the perfect one. But, with a little effort, you’re sure to find the right place for you and your family.
Not touring all your options
You may be so in love with the first home you see that you don’t look any further.
When you’re looking for a home, it’s important to tour all the available homes before making a decision. This allows you to compare and contrast the different properties and find the one that’s best for you. It also allows you to talk to home buyers who have already closed on their dream home. They can tell you what to look for and what to avoid. By touring all the homes, you’ll be able to find the one that’s perfect for you.
Looking for a home is a big decision, and you want to make sure you’re making the right choice. Touring all the available homes will help you do that. You’ll be able to compare and contrast the different properties and find the one that’s best for you. You’ll also get some great advice from homebuyers who have already
Some homebuyers make the mistake of looking for a home before touring all the available homes. This can be a big mistake because you may not find the right property and you may end up paying more money. It’s important to tour all the homes so you can find the one that’s perfect for you. Talk to home buyers who have already closed on their dream home – they can give you some great advice. By touring all the homes, you’ll be able to find the one that’s perfect for you.
Skipping the home inspection
This is probably the biggest mistake a buyer can make.
You must take the time to go through a home inspection before closing on your dream home. Home inspections are not just for buyers who want to fix up their new place, they also provide valuable information about the current state of the property and what needs to be done to make it safe and livable. This includes everything from checking for termites and leaks to that the plumbing system works and other structural items.
Home inspections can lead to follow up inspections to determine the extent of repairs that may be needed. This could include chimney inspection, oil tank sweep, or bringing in a plumber or electrician to look at certain items.
If you skip the home inspection, you may not be aware of any major repairs that need to be done or any potential safety hazards. This could lead to costly repairs down the road or, even worse, an unsafe home. It is always better to know what you are getting into before signing on the dotted line.
Over-spending on your down payment
You don’t need to put down 20% to buy a home.
When saving up for a down payment, it’s important to be mindful of how much you’re spending. Overextending yourself can put a damper on your plans to buy a home. It’s not necessary to put down 20% to buy a home – there are many loan programs available that we discussed earlier that require far less. So be smart with your down payment savings and you’ll be in your new home in no time.
If you’re having trouble saving for a down payment, consider looking into programs like the VA loans, FHA, and other homebuyer assistance programs. These programs allow borrowers to put as little as 3.5% down or 0% down for qualifying veterans and receive a lower interest rate. It’s perfect for first-time buyers or those who may have a little bit more debt than they’d like.
Whatever route you decide to take, be sure to consult with a trusted mortgage lender. They can help you find the best loan program for your needs and get you into the home of your dreams. We have relationships with many great lenders so if you need a referral reach out to us at 201-685-4788 or [email protected]
Not considering FHA, VA or other government-backed loan programs
Many first time home buyers don’t understand all of the options available to them in looking for a mortgage. They think that you need a traditional loan with a 20% downpayment and a 30-year term. While that is a good option for many it may not work for all. That is why there are many programs available to assist homebuyers who don’t have a 20% downpayment but could otherwise qualify for a loan.
FHA loans or Federal Housing Administration loans are government backed loans that allow borrowers to have down payments as low as 3.5% and credit scores above 580. These can be great loans for buyers with less in the bank for a downpayment and some credit issues. Do keep in mind that you will need to mortgage insurance for the life of the loan with this loan.
VA Loans or Veterans Affairs loans are provided to our active and retired military. These loans can have 0% which makes it much easier for our military to purchase a home. There are lending limits based on location and other requirements like mortgage insurance but they are a valuable resource to the men and women who have served our country in the military.
It would certainly be a first time home buyer mistake to not look into these options as they may mean the difference between buying and renting. There are other products like USDA loans and first time home buyer programs that are available as well. It is always best to talk through these options with your lender before starting the process so you are as educated as possible about your options.
Not doing a Budget before Buying a Home
Before starting the home buying process it can be a good exercise to do a household budget. Look at car loans, insurance, food, savings, and all other expenses you have regularly. This is will help you understand what you are paying now. Once you have that you will have a better understanding of what your budget will be for buying a home. This one first time homebuyer mistake can cost you in the long wrong if you don’t budget for housing expenses. It can also be a good practice to live a more frugal lifestyle before buying to better prepare yourself for the potentially higher costs of owning.
Not considering all the costs of homeownership
There are many costs associated with owning a home that you may not have considered.
When you buy a home, you’re making a huge investment. It’s important to understand all the costs associated with homeownership so that you can make an informed decision about whether or not to buy. Some of the costs you may not have considered include property taxes, insurance, and repairs and maintenance. By talking to a real estate agent before before starting your search for a home, you can get a better idea of what to expect financially.
It’s important to weigh the pros and cons of homeownership before making a decision. Make sure you understand all the costs involved, as well as the risks so that you can make an informed choice about whether or not to buy a home.
Not getting a real estate agent
A good real estate agent can help you navigate the process and find the best home for you.
When it comes to buying a home, it’s important to have an experienced and knowledgeable guide by your side. A real estate agent can help you navigate the process and find the best home for you – especially if you’re a first-time buyer. They can also help you negotiate a better deal on the property you want and they understand the process and how to navigate you through it.
Real estate agents are experienced and knowledgeable about the market, and they have access to resources that buyers often don’t have. They can help you find the best property for your needs and budget, and guide you through the entire process, from finding a home to negotiating a contract to getting you to the closing table. Working with an agent can save you time and money. So if you’re looking to buy a home, don’t go it alone – hire a real estate agent!
Avoid These First Time Buyer Mistakes During the Transaction
There are pitfalls you also don’t want to make once you find that dream home. These mistakes can cost you the home you have looked so long to find so they are important to understand before embarking on the process.
Don’t Make any Major Purchases
When buying a new home it is imperative to be mindful of your finances. You have saved for your downpayment, watched your credit, and gotten pre-approved for a mortgage. To do that you may have been frugal with your finances and now is not the time to change that.
When you purchase major items like a car, furniture, or other big-ticket items it does two things. It takes away from the money you have put aside for your downpayment and homeowner expenses like repairs and upgrades. Your rainy day fund is very important especially when you are a first time buyer because unexpected repair items may come up after closing.
Secondly, it can raise red flags for your lender. Throughout the mortgage process, your lender will periodically ask for bank statements. They want to be sure you have the money you say you do and that you will be able to pay your downpayment and make your monthly mortgage payments. If you start buying cars and expensive furniture it may ruin your chances of getting a mortgage.
Don’t Make Changes to Your Credit
This first time buyer mistake can take on two forms. The first and most obvious would be taking out a new line of credit. This means no new credit cards, car loans, or anything that creates a new loan for you. The bank looks at your overall credit score but they also look at your liabilities meaning they want to know you haven’t extended yourself too much. Opening new lines of credit signals to the bank that you may not have enough at the end of the month to pay them. And know banks want to get paid back what they loan you!
The second side of this is avoiding closing any lines of credit. This may seem like a good thing to do but it can have adverse effects. Your lender may suggest you close certain accounts to improve your credit score but do not do this without first consulting your lender.
Don’t Make Any Major Withdrawals
As we mentioned earlier when discussing major purchases we want to be mindful of the money you are spending. This goes for making major withdrawals as well. To the bank if you are making a major withdrawal you are likely spending it on something or hiding it for some reason. They will check your balances so they will notice anything big.
Obviously, you still need to pay your bills and live your life but any out-of-the-ordinary withdrawals will get the attention of the lender. So avoid this first time home buyer mistake and don’t make any major withdrawals or purchases.
Don’t Make Any Major Deposits
This one might seem strange, especially to a first time home buyer but you also want to avoid major major deposits. More money in my account is better, right? Yes and no. The more money in your account definitely can help you get a loan and be a good homeowner but making large deposits can set off red flags. the lending will be asking where that money came from. Was it from a legal source? Was it from a loan you took from someone else?
If you do have a large deposit to make, call your lender first. If it is a gift from a loved one then there is a process to do it the right way. That would include a gift letter explaining that the gift does not need to be repaid. You would also need to show the flow of money from that loved one to your account through bank statements or a letter from the financial institutions.
Don’t Get a New job
getting a new job can be exciting and can bring new opportunities and bigger paychecks. But to a lender and it can look like instability. When lenders vet new borrowers they want to see stability in your income. They may want to see that you have been at a current job for a certain number of years or at least in the same industry.
Changing jobs during the mortgage process can become a major first time buyer mistake because it could ultimately cost you the mortgage and the home. To avoid this mistake try to push the new job until after closing or consult with your lender. It is possible if you are staying in the same industry or have a long-term employment contract you can work it out and move on with your home buying process.
The Bottom Line
So, whether you’re a first-time homebuyer or you’ve been through the process before, it’s important to consider all of the costs and risks involved in homeownership. Weigh the pros and cons carefully before making a decision – buying a home is a huge investment! And don’t forget to consult with a trusted mortgage lender and real estate agent to get the best advice.
The process of buying a home doesn’t need to be scary and stressful. With a good real estate agent and lender, you will have the guidance to get to the closing table with a good deal and a solid investment in your future.
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