We can help you make sure nothing slips through the cracks in one of the largest financial decisions you’ll ever make. Most first-time homebuyers and many buyers who have purchased homes before don’t understand how to navigate the purchase of a home smoothly.
Here are 6 mistakes that first-time homebuyers, and all other homebuyers should avoid.
1 – Not Hiring A Real Estate Agent
I know what you’re thinking, of COURSE we would tell you that you need an agent – that’s what we do! But that is the point – negotiating the purchase & sale of homes is what we do every day, so we understand the process, know how to read the contracts, and are aware of the red flags to look out for. As REALTORS®, we abide by the Code of Ethics, and put your needs first. We are there to help guide you through your home purchase and help you avoid the pitfalls and problems that could cost you.
2 – Not Keeping An Eye On your Credit Score
And no, Credit Karma won’t cut it. You need to monitor your credit as reported by one of the “Big 3” reporting agencies – Trans Union, Experian, or Equifax. These are the agencies that lenders use when determining if they will lend you the finances to purchase your home, and at what rate.
Fortunately, many banks and financial institutions offer credit monitoring as one of the perks of doing business with them, so it’s much easier to keep tabs on your score now than it was even 5 years ago.
3 – Looking At Homes Before Getting Pre-approved
We get it – looking at homes and dreaming about your future is fun! However, we also have seen the heartbreak when a buyer has found their perfect home, only to find out that they can’t afford it.
When you look at homes outside your budget, none of the homes that are within your budget will ever measure up. This is why we don’t go looking at homes until you have a pre=approval letter from your lender.
Also, in a high Seller’s market with multiple offers on every property like we are experiencing now, submitting an offer without a pre-approval letter almost guarantees that your offer will not be the offer that the sellers choose.
If you don’t have a lender yet, we would be happy to give you a list of local lenders that we work with, just ask!
4 – Not Shopping Around For A Mortgage
Yes, this means that you will need to answer the same questions a few times, but this is a huge financial decision! You need to make sure that you are comfortable with both your mortgage lender and the mortgage company that will be managing your loan.
We all have different personalities, and sometimes you click with a great lender… and sometimes you just don’t. It’s ok – we’ve all been there. You will be discussing your finances in depth with this person, so you need to feel comfortable.
We highly recommend working with a local lender. Western Colorado has a few unique issues that happen with our properties, and having a lender who lives and works here in the valley will help immensely if an issue arrises. This is why we have a list of local lenders – people who live here and do business here, and understand our unique rules and laws. Working with an out-of-town or out-of-state lender may be fine, but you will often just be a number on a page who they haven’t sat down across a table with and gotten to know. They won’t be as willing to go to bat for you if a problem arrises.
Let’s also discuss rates here. Many people choose their lender based solely on the rate they are quoted. Yes, getting a low rate is important, but make sure that you have them fully explain everything to you! Sometimes that amazing rate they quoted has a fee attached. Sometimes their fees to close the loan are much higher – or lower – than the competition.
Lenders are required to give you a breakdown of all of the fees charged, and what the total amount due at closing and what will be paid over the life of the loan. Ask your lender to go over this with you and fully explain is to that you understand what every number on that sheet means.
5 – Buying More House Than You Can Afford
We have both worked in lending, and understand that mortgage companies will run the numbers and tell you the highest dollar amount the computer says you can afford. Don’t borrow that much!
Take some time to really sit down and go through your finances. Write down all of your monthly expenses – yes, even your morning coffee and date nights. ALL OF THEM. See how much you can comfortably afford in a house payment – remembering to add in your taxes and insurance payments each month as well.
Give this amount to your lender and ask them how much buying power you have with THAT monthly amount – not the highest the computer says you can afford. Working just to make your house payment isn’t any fun, and it isn’t realistically sustainable for very long. Owning your home is amazing, but having a life is pretty cool too. Make sure your budget can handle both.
6 – Skipping the Home Inspection
In a market like we have this Fall, many buyers are making offers that leave the home inspection out. While this may be less of an issue in new construction, with an older home it’s pretty important.
The home inspector does a visual inspection of the property to see if there are any issues that need to be looking into further. They are not the expert on every facet of the home – they leave the highly detailed inspections to the trained professionals like electricians, plumbers, etc.
The job of the home inspector is to go through the home to see if there are any major issues that could cause a problem. They will check the home from the roof to the foundation, looking for cracks, obvious leaks, checking windows to ensure they operate correctly, etc. They look at homes every day, and know the warning signs to be aware of, so that you can make an informed decision.
As you can see, there are many steps in purchasing a home. As your REALTOR®, it is our job to guide you through your home purchase and make it as smooth as possible for you. We are here to answer any questions you may have along the way, and, if necessary, direct you to the experienced, licensed professional contractor to help.
We both love working with first-time homebuyers! If you’re considering purchasing a home, give us a call!
For more tips for first-time homebuyers, visit the First-Time Homebuyers section on our blog.