Buying your first home is a major decision that shouldn’t be taken lightly. For most first-time buyers, it means escaping the confines of a too-small apartment, their parents’ home, or a roommate you no longer see eye to eye with. It also means that the buyer is ready to establish some roots, invest in property and their future, and they’ve found the stability needed in their personal or professional life to be able to settle down. For all of those reasons and more, buying your first home is an exciting time, but comes with immense responsibility.
Though not all first-time homebuyers are the same, and the experience from person to person can be quite different, it can be a complicated process. With so many decisions to make and factors to consider, it’s understandable that mistakes can be made throughout the process, but here’s a few common ones and tips to avoid making them yourself.
- Looking at homes before you have applied for a mortgage loan – The biggest mistake first-time homebuyers can make is looking at homes before they know what they can afford. This is the easiest way to lead you to making mistake number two as well.
- Buying more house than you can afford – When you don’t know what you can afford, or simply ignore that figure altogether, you’re well on your way to buying “too much” house. Sticking within your budget will keep you more financially secure and allow you to save up for a bigger home down the line.
- Putting too much into your down payment – Besides choosing the house and getting approved for a mortgage, calculating the appropriate down payment is the next big decision. Though the larger the down payment results in a smaller mortgage, you want to be realistic with your finances and try not to drain your savings.
- Not putting enough into your down payment – On the other hand, not paying enough of a down payment is a common mistake and regret for many first-time homebuyers. Though waiting too long to save up for a bigger down payment can be risky and costly, not paying enough into a down payment leads to a higher mortgage and bigger monthly payments.
- Not managing your credit – When applying for a mortgage and closing on a home, you want to maintain a stable credit report. You want to avoid making big purchases on credit, opening or closing new lines of credit, or missing payments during the entire home purchase timeframe. Any of these occurrences can hurt your chances of receiving final approval for a mortgage and is not something you want to find out the hard way.
- Holding out for the “perfect” home – You want to avoid moving too fast in your home search and not necessarily purchase the first home you look at, but you also don’t want to take too long. First-time homebuyers may not understand that unless you build, your perfect home may not already exist. Sometimes you need to use your imagination and invest in renovations to turn a property into your “perfect” home.
- Not considering the costs of being a homeowner – Though there are many benefits to being a homeowner, it does come with its fair share of costs besides the mortgage payments. Renovations, maintenance, and repairs can add up and there’s no longer apartment management or a landlord to foot the bill. You want to make sure you have ample savings to cover any unexpected expenses that come from home ownership.
Purchasing a home, whether it’s your first or fifth, is always a big decision. Figuring out what you do and don’t want in your new home, what you can afford, and where you want to live is just a portion of the puzzle. It’s important to be realistic, thoughtful, and deliberate throughout the process of purchasing your home, and try to avoid making any mistakes or missteps along the way. It’s a complicated process, but avoiding the common mistakes is the best way to escape buyer’s remorse.