First-Time Homebuyers: Common Mistakes to Avoid
by Joseph Gantert 10/05/2020
Photo by Mohamed Hassan via Pixabay
It’s part of the American DNA to want to own a home. It can be your immense joy or become a nightmare if you don’t avoid some of these first-time buyer lapses in judgment.
What to Avoid
- Overbuying. The mantra used to be “buy the biggest house you can afford.” After all isn’t bigger always better? The challenge is that affordability is subjective. If you’ve never owned a home, you don’t know the intangible costs. A bigger house has more space to live, but it also has more space to heat and cool. A large yard is fantastic for the kids, but it comes with landscaping and maintenance responsibilities. Go big if you like, but do it with your eyes wide open. Ask your agent to help you determine ongoing costs for the homes you visit in your quest.
- Buying just to buy. Yes, that down payment is burning a hole in your virtual pocket. You want it invested in property so that you can get on with the business of living. But unless you have a time-restriction on funds that need reinvesting, take your time to get what, and more importantly, where you really want. Visit neighborhoods during the day on different days, in the evening and on weekends. Drive around the nearby streets too. This will help you get more of a feel for the overall area.
- Becoming emotionally attached to a home you don’t yet own. When you’re shopping for a home, it’s easy to find “THE ONE” that checks all your boxes — except the budget box, or the timeline box, or the practicality box. When home stagers’ do their job well, you’re guaranteed to have an emotional reaction to a house. Their entire goal is to trigger your emotions so that you “have to have” that house. But emotions can be fickle. What you love today in this house could be the thing you despise in 10 years of living there. It’s essential that you spend time with your buyer’s agent to determine the non-negotiables you want for your new home.
- Entering a bidding war.When you have unlimited funds, perhaps you can afford to pay more for a home than the market price. But lenders limit the size of a mortgage based on a lot of factors you may not be aware of in the housing market. Just because the price of a house goes up doesn’t mean you can get a loan to cover the full difference between what you pay and what the market says it’s worth.
Most of all, don’t buy without representation. Your expert buyer’s agent knows all the ins and outs of the local market and can steer you clear of pitfalls, potholes, and potentially poor choices. They negotiate on your behalf and represent your (not the seller’s) interest in those negotiations. Rely on them to show you homes that fit your list and check your boxes without breaking the bank or putting you in an overstretched situation.