You may be able to avoid the potential pitfalls and mishaps of purchasing your first home by heeding the advice of those who’ve gone through the process many times. And nobody has gone through the home buying process as often as real estate agents, who often close many houses every month. These are the mistakes Realtors see again and again—and how to overcome them.
1. You Don't Know Your True Priorities.
Before you start your home search, isolate your top criteria—whether that’s a certain number of bedrooms, proximity to work or school, a fireplace, or whatever is top on your list so you won’t be easily sidetracked. "The home-purchasing process tends to become a journey, however creating a list of top features or amenities increases efficiency," says Michael A. Kelczewski, Realtor with Brandywine Fine Properties Sotheby's International Realty in Centreville, Del.
2. You Have Zero Patience.
Purchasing a home is a huge investment, so don’t rush into it. It may take some time to find the right property, but your patience could be rewarded with a great find. For instance, when one client was having trouble finding the right home, Kelczewski suggested they look at a distressed property that would need some work. "We arranged for contractor estimates before submitting an offer, and we got a great deal on an overlooked property that required mostly cosmetic work," he says.
3. You Go House-Blind.
If you’re new at buying a home, seriously consider the advice of your Realtor, lender and others who’ve done this many times before. In another case, Kelczewski’s clients ignored his warnings about the expense and complication of purchasing an old farmhouse for their first home and moved forward with the offer. When the inspection uncovered all the home’s problems and repairs that were needed, the buyers ended up backing out of the deal. While they were able to recover their escrow funds, they couldn’t get back thousands of dollars spent on the inspection, appraisal, and other due-diligence tasks.
4. You Think Your Loan Approval Amount IS Your Budget.
When you go through the pre-approval process, your mortgage lender will let you know the loan amount you qualify for based on your credit score and other financial information. Often, this number translates into a monthly payment that is higher than what you can actually afford, along with all of your other monthly expenses. Just because you qualify for a certain mortgage price doesn’t mean you should buy a home for that price.
Purchasing a home with a payment that is too big for your monthly budget can leave you "house poor, stressed, and unable to afford maintenance," says George Lawton, Realtor at RE/MAX Over the Mountain in Birmingham, Ala. "Instead, ask the lender to work backwards to find what the budget can afford. This way, you can know the home fits in your budget, and you can find a home you can comfortably afford."
5. You Decide To Buy A New Car Just Before Closing.
Even if you’ve gone through the pre-approval process with a lender, your mortgage isn’t final until you’ve closed on the house. Don’t jeopardize your ability to get the mortgage by making large purchases or doing other things that can affect your credit score or borrowing ability.
"A common mistake that I've noticed is that once a buyer is pre-qualified and has had an offer accepted by a seller, they will go out and purchase a car, apply for additional lines of credit, accrue more debt, miss payments, or pay late on current obligations," says Colin McDonald, licensed real estate agent with Berkshire Hathaway HomeServices Blake in Delmar, N.Y. "Doing these things potentially could affect your credit score in a negative way, resulting in you not receiving final approval from your lender. I always instruct first-time homebuyers I'm working with to not make any large purchases until you've closed on your new home. A pack of gum, fine, but not a car."
Everything You Need to Know Before You Sign on The Dotted Line
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