We know that buying your first home is one of the most exciting events that will take place in your life and we want to help prepare you for the process! Read about the most common first time home buyer mistakes so that you don’t make them! If you want the real deal service come to us, The Boyenga Team for all our Bay Area Real Estate Needs.
1. Waiting for the PERFECT property
Having a home crush is absolutely okay, we all have them, but finding that exact house with the fire pit outside and the sliding barn doors with the amazing walk in closet might not come all in one. Be willing to make some renovations (even if it’s in the future) and don’t let the right one slip away, especially in the Silicon Valley.
2. Choosing a home over a neighborhood
You found the perfect little place to call home but.. there’s another house in the running too. It may seem like the easy route to take the turn key ready to move in home over the fixer upper but compare the neighborhoods first! Do your research, ask your family and friends what they know about the area, at least Google! Find out the crime rate and the schools and think about the future and where you want to raise a family. If all else fails, think about the resale value of your home in each community and what that looks like from an investment standpoint. Don’t let the thought of a little work trump the right decision. Ask your real estate agent (or us!).
3. Spending everything you have
This is one of the biggest mistakes first time home buyers do and the risk is not usually worth the reward. Many will gather all that they have for the 20% down payment and leave themselves depleted of all money just so they do not have the pay mortgage insurance. Instead, plan ahead and save leading up to buying so that you have a backup fund in case of emergency because although not ideal, paying mortgage insurance is safer than leaving yourself high and dry without any options!
4. Buying more than you can afford
Similar to #3 is buying a home that is larger and more than what you can afford. Sometimes unexpected expenses come up and life happens and you want to be prepared as much as possible. Why put yourself at risk to lose a house that you made home? Focus on the monthly payment rather than the overall loan amount that you qualify for and budget based on that amount and what you can afford.
5. Being careless with credit
Don’t learn this the hard way as a first time buyer – let us tell you the process! At preapproval a lender pulls a credit report to make sure everything is squared away for closing. Because of this, do not make any crazy purchases such as buying a new car or taking out a new loan or opening up a new credit card from the preapproval to closing. Bay your bills on time and in full during during this period of time so that your credit score stays the same and your loan approval stays out of jeopardy.
6. Assuming you need 20% down payment
Yes 20% down will help but many buyers cannot put that amount down. According to the National Association of Realtors the median down payment on a home is 13 percent. Even if you wanted to wait and save 20% down it may take you time where that money could be spent in better ways. Of course you will have to pay mortgage insurance but there are many options when it comes to down payment amount.
7. Only talking to one lender
However you want to look at it, this could cost you money or save you money. Give yourself multiple banks and lenders to look into and compare rates, fees, and loan terms. What may seem like the best deal overall may not be the best fit for you in your situation. Customer service is important and will help you make the right choice because their responsiveness will be a reflection of their work ethic.
8. Underestimating the cost of owning a home
If you thought you saved up for your new home, well keep saving! The average homeowner pays about $2,000 annually on maintenance services. The taxes and multiple insurance and utility maintenance is often overlooked or forgotten when purchasing a new home and you must be saving every month a little for emergency (kind of like insurance for yourself). Plan to save 1-3% of your home’s purchase price and make sure your shopping for different insurance plans and comparing so you know you’re getting the best deal.
9. Emotion made decisions
You might fall in love with a lot of homes throughout your search but becoming emotionally attached to any would be a big mistake. Making an offer does not mean done deal and basing a decision based on emotion would be a personal let down if anything were to fall through (trust me, we’ve seen it). Nothing is yours until everything is signed and complete so have a budget and stick to it!