Topic description: When you do anything for the first time, mistakes are bound to happen. Unfortunately, when it involves an expensive purchase like a house, making a blunder can be very costly. Thankfully, there are some guidelines you can follow to limit the risk of such an occurrence. We have listed some of the most common mistakes first-time buyers should avoid. They include not waiting for the right time, not preparing financially, going it alone, and not doing home inspections. These costly mistakes can be avoided with the guidance of an experienced real estate agent, increasing your chances of success and having a positive first-time home buying experience.
When you do anything for the first time, mistakes are bound to happen. Unfortunately, when it involves an expensive purchase like a house, making a blunder can be disastrous. Thankfully, there are some guidelines you can follow to limit the risk of such an occurrence.
We have listed below some mistakes that first-time buyers should avoid.
- Not waiting for the right timeIf you are not fairly certain of staying put for a reasonable length of time, then buying a house may not be the best option. Purchasing should be done with the understanding that property prices tend to appreciate gradually over a long period. If you need to move again in less than five years, you may or may not be able to sell at a net profit, depending on the dynamics of your local real estate market.
- Going it on your ownBuyers that rely on just their own research and gut instincts can easily end up overpaying or regret having purchased the wrong home later for various reasons. Working with an experienced Realtor will assure you of getting professional advice and guidance as you go through the various processes of buying a house. From identifying and vetting the most suitable properties that fit your check list and budget, to negotiating on the best possible price and terms, protecting you with various contingencies, etc., there are many ways an experienced agent can help ensure your success.
- Failure to nail down financesNot taking the time to figure out a budget will be a costly mistake in the long run. Understanding how much house you can afford will help make your home search more efficient and ensure that you don’t overreach. Start by looking at your household incomes and work out how much you can commit to housing costs. Consider not only your mortgage repayments, but other homeownership costs as well, including utilities, HOA fees, maintenance and insurance.
Once you figure out these costs, get pre-approved for a loan. Pre-approval will give you a good idea on how much mortgage you can obtain, which you can use in setting your budget. Likewise, getting pre-approval will help you better understand your financial standing. You may find you need to work on improving your credit ranking first to secure better mortgage terms.
- Not putting enough thought into your down paymentRelated to financing, you also have to consider how much down payment to put down. As a first-time homebuyer, you may qualify for a government-sponsored loan that will allow you to buy a home even with a low down payment. While this can be advantageous for some buyers, being able to put a larger down payment can enable you to qualify for better loan terms.
With a minimal down payment, if you need to sell before you’re able to build sufficient equity, you may end up owing more after closing costs than when you started. Likewise, a low down payment often means paying private mortgage insurance every month until your home equity is more than 20%. You have to factor this into your monthly expenses, as well.
- Not setting parametersIf you do an online search for houses in the area you’re interested in, chances are, you will generate scores or even hundreds of results. Attempting to analyze all of them on your own will waste tons of your valuable time and often results in making wrong assumptions and missing out on better choices.
An experienced broker can make this process much less stressful and far more efficient than trying to do it on your own.
To help narrow down your search to what suits you best, list your “must haves” and “wants.” Take into consideration such factors as commute time to work, choice of school districts, neighborhood, the space you will need for your growing family, security and potential for development or resale.
- Not doing a home inspectionThis professional assessment is important in ensuring you avoid costly deferred maintenance or unknown repairs later. In Washington state, sellers are required by law to complete a disclosure form that details the condition of their property for categories like sewage, foundation, electrical and plumbing systems, etc. However, a professional inspection may reveal problems or defects that were not included in the disclosure form or which the seller did not know about.
Your Realtor will be able to recommend a qualified professional to do the inspection. If an inspector calls out items that are not acceptable, your agent will negotiate with the seller to either make repairs or to adjust the sales price to allow you to pay for the repair costs. In extreme cases, you may decide to move on and find a different property.
To protect you from any unforeseen problems, you may include a home inspection contingency on your purchase agreement.
Ensuring that you avoid the pitfalls as a first time homebuyer is just part of the service that we offer at Mary Pong Group. Get in touch with me at mary(at)marypong(dotted)com, or call 425.829.3417 for help in guaranteeing you remember your first purchase with joy.