Avoid these mistakes when buying your first home
Buying a home for the first time is comparable to the first time you ride a bike: You can learn about how it works from your parents and observe it from a distance, but you really won’t know the ins and outs until you actually sit down on the bicycle and start riding.
Like most beginners, first-time homebuyers will likely make a few mistakes as they initially go through the homebuying process. Here are five mistakes first-time homebuyers often make and how to best avoid them.
Waiting too long to make an offer
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One of the biggest mistakes first-time homebuyers make is simply waiting too long to get into the real estate market, said Jay Carr, a senior loan adviser for RPM Mortgage in Newport Beach, California.
Because the rates look like they’re going to continually increase over the year, it’s important for buyers to get in as early as they can so they can avoid paying more later on. If you see a home that you’re interested in and you have been thinking about entering into the market for some time, don’t hesitate too long.
Trying too hard to get the home for less than the asking price
Many first-time buyers are younger, tech-savvy and are comfortable researching homes on their own. Overall, these are positive traits in a buyer. However, because these buyers are typically self-sufficient when it comes to other purchases, they often think they know best when it comes to what price they want to offer for a home.
“Buyers rely too much on what they see on the internet instead of the good advice they would hear from a real estate agent,” Carr said.
Of course, sometimes it pays off to be bold in an offer — in that you get to pay a lot less than the asking price — but often the scenario can play out so the would-be buyers negotiate themselves out of a deal.
It’s important to pay attention to your real estate agent, who is a seasoned professional, when it comes to putting in an offer so you don’t offend the seller and lose the house you want.
Not exploring all financing options
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Carr said many first-time buyers have grown up thinking they need to save up for a 20 percent down payment before they can enter the housing market. While it is always great to have as much money to put down as possible when purchasing a home, it’s important to consider many of the new options available today.
One option is a homeownership investment, such as the Unison HomeBuyer program, which typically provides up to half of the down payment you need. The money is an investment in the home, not a loan, so there are no interest charges or monthly payments. This new type of financing — which works in combination with a traditional 30-year mortgage — can offer greater flexibility and control to the homebuyer. It allows you to cut the time needed to save for a down payment in half, lower your monthly payments and avoid mortgage insurance, or increase
your purchasing power so you can buy the home you want.
• Wanting the dream house right away
Everyone has a picture in their minds of what their first home will look like. Whether you envisioned a Craftsman bungalow near all your favorite bars and restaurants or a classic ranch-style home with tons of land and no neighbors, chances are you’re going to have to trade up to that dream home from your first starter home.
“If you really like the house, you probably can’t afford it. If you think the house is just kind of below what you want, it’s probably right in your price range. Get in the market rather than wait to get the dream house,” Carr said.
Carr advises those in the hunt for their dream home to focus on becoming homeowners now and to wait on their dream home until they have built up equity and have higher incomes in the future.
The median tenure of a homeowner in 2017 is about 10 years, but for the 20-year period before that, it was only six. Believing that this won’t be your last house can take a bit of pressure off the home being perfectly suited for you.
• Not having your own representation
Another mistake many first-time homebuyers make is not having their own representation, meaning that they use the seller’s agent as their own buyer’s agent.
While this is not always a bad situation, Carr cautions buyers to be careful that they have selected a good and trustworthy real estate agent who is looking after their best interests. In other words, you don’t want to pay an unfair price because your real estate agent is looking after only the sellers’ best interest.