6 First Time Home Buyer Pitfalls To Avoid
We’re sure you’ve heard of the absolute HORROR stories from friends and family about their first time buying a house. But if you get the proper information, it’s not that bad – No, it really isn’t bad. We promise!
Follow our advice and learn about the 6 first time home buyer pitfalls to avoid to make buying a house smooth and simple:
Top 6 First Time Home Buyer Pitfalls To Avoid
- Borrowing The Max Loan Amount & Not Budgeting Expenses
- Not Planning Ahead
- Not Getting Pre-Approved
- Only Checking Online Lenders
- Understanding Debt To Income Ratios
Get the juicy details below…
1. Borrowing The Max Loan Amount & Not Creating A Budget
First off, BRAVO for going to a direct lender to get a mortgage pre-approval – it’s the first step in the right direction.
And if you haven’t done this yet, here are the most important 6 questions to ask mortgage companies when shopping for a lender.
HOWEVER, let’s not forget that it doesn’t stop there! Now that you know how much home you can buy, take a step back and find out how much home you can afford (Yup. We’ve addressed that #1 asked question, too – check it out! We found some crazy statistics about 1st Time Home Buyers)
Do some due diligence on what it would cost to maintain and live in your new home. Factor in the following when creating your monthly expenses:
- Home Insurance
- Association Fees
- Home Maintenance
- Major/Minor Repairs, just to name a few
Setting aside funds to cover those lovely “surprise” repairs and budgeting monthly home expenses will save you lots of stress and your own horror story.
2. Not Planning Ahead (Pssst!…For When You Sell)
“What do you mean ‘for when I sell’? I haven’t even moved in yet?!”
Yes. Breathe…It’s for when you decide to move for various reasons: Relocation, Upgrade for more space, Downsize, etc.
First time home buyers usually stay in their first home on average for about 4 years. So when they are ready to sell, they may turn to Zillow Zestimates, which isn’t always as accurate as one would think.
And guess what?! We’ve also created another tool that addresses the planning for the future – Try our Rent vs. Buy Calculator. It’ll tell you the benefit of owning a home, which also includes when you sell your home in the future.
Then you will be able to get back what you put into the home initially and hopefully get more when you sell as an added bonus.
3. Not Getting A Pre-Approval
Supporting tidbit #1 – Getting a pre-approval is the first, repeat…FIRST thing a first time home buyer should do before the house hunt.
As we’ve prefaced before, it allows you to know how much home you could buy. It’s really not that bad – just as long as you are properly informed and work with the right lender who will guide you every step of the way (shameless plug), it’s actually quite an enjoyable experience.
In fact, we even have a ULTIMATE mortgage approval checklist as a guide to help you gather all the documents needed for a mortgage pre-approval.
4. Indecision (Spoiler Alert – Secret Tip Included!)
“Well this is a huge investment, I need to make sure this is my dream home – I NEED TO MAKE SURE!!!”
But sometimes not being ready for the bidding wars and acting on a deal could lead to you losing your dream home that was perfect.
This is also why doing some due diligence and picking the right team of pros who have YOUR best interest in mind to get you into an affordable dream home is key.
Your real estate agent will take the time to walk you through the process and truly understand what you are looking for to help you decide on the right house.
And in turn, your lender will help you plan out your monthly budget so you don’t overextend yourself for future endeavors – like a vacation, kids, new shoes/bags for the ladies or for the guys, that brand new gadget that you’ve been obsessing over, etc.
We know. We love those tech toys, too. (Psst – try our True Affordability Calculator. It does all of the above for you so you know what you SHOULD buy, not can buy.)
[Secret Tip #1]: Get your (and your co-borrowers’) financial picture & Pre-Approval Letter together so when the bidding wars start, you’re able to make a decision quicker. If you are honing in on a Co-Op, they require a co-purchase where as condos let parents purchase for their kids. Yup, at Get A Rate – we like to arm you with info ammo.
5. Only Checking Online Lenders
You’re thinking “well of course you wouldn’t plug your competitors” – but there are valid reasons for this:
- Not Local – Not having local appraisers to provide accurate home values leaves buyers responsible to cover the balance of the sale at the last minute or the deal can fall apart. No Bueno
- No Home Loan Advisors – Sitting down with a Licensed Home Loan Advisor who specializes in home purchases can help ease first time home buyer anxiety. You may have questions after hours and our Home Loan Advisors are more than happy to help. Check our Google+ Reviews – Our #1 mantra is providing exemplary service. (Plus – we are a non-commissioned home loan lender.)
- Teaser Rates – They are great to hook you in, but everyone’s situation and goals are unique. Get A Rate Home Loan Advisors can customize a loan option to fit your needs and go over first time home buyer programs on the spot. We got your back!
Buying a home should feel right, not overwhelming. But with the right team to support your goals, it’ll be a breeze.
And if you’re wondering what actually goes in to a mortgage payment, check out Homer Simpson’s Guide To Mortgage Payments.
6. Understanding Debt To Income Ratio (DTI – Recurring Monthly Debt Divided By Monthly Gross Income)
“Uhhh….Yeah – I knew that….?!”
You might not know what this is, but it can affect your buying power. The lower the DTI is, the better when it comes to your mortgage rate.
Let us explain: Like we said, your DTI affects your buying power and what you can afford. Any extra costs like a car payment or a balance on a brand spanking new credit card from buying furniture for your new house (for example) can increase the ratio number.
You can read more about our Do’s & Don’ts: Simon Says…(Home Loan Rules) and download a free copy of this list.
There you go! Pretty helpful stuff, right? Follow these simple tips for a smooth first time home buying experience.
Feel free to call 888-562-2611 to speak with one of our Home Loan Advisors or stop by our office to discuss all available loan options and first time home buyer programs.
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