5 Mistakes All First Time Homebuyers Should Avoid

First time homebuyers often enter the home purchase process excited and optimistic. After all, nothing is quite as exhilarating as the prospect of owning your first home, and many people look forward to the step. Because first time homebuyers are often inexperienced in the real estate market, however, they’re at increased risk of making preventable mistakes during the purchasing process. With this in mind, here are the top five mistakes all first time homebuyers should be careful to avoid.

5 Mistakes Most First Time Homebuyers Make (but Shouldn’t)

From paying too much to diving in too quickly, these five mistakes are common among first-time homebuyers.

1. Believing home ownership is just a mortgage payment

While the mortgage payment is the most visible aspect of home ownership, there are dozens of other costs that affect the monthly payment amount. Things like insurance, property taxes, HOA fees, and maintenance all factor into the overall cost of home ownership. It’s critical for first time homeowners to consider this before signing the purchase agreement.

Remember: just because the mortgage payment seems affordable, it doesn’t mean home ownership will be.

2. Not applying for a loan soon enough

Getting approved for a mortgage takes some time. People who start looking for a home first and apply for a loan second are likely to find themselves outpaced by the market. With this in mind, first-time shoppers will do well to get pre-approved for a mortgage before they start scanning the classifieds. In addition to giving you an accurate idea of how much you can afford, this simple step will also help ensure you’re ready to take the plunge when the opportunity arises.

3. Not hiring a lawyer

A real estate attorney can be a critical resource when it comes to purchasing a home. From weeding through contracts to ensure there’s nothing that will take advantage of the buyer, to hammering out better sales deals, a lawyer is a must-have for anyone who’s never purchased a home before.

4. Spending the entire savings account

While you might have enough in the savings account to cover a down payment, this doesn’t mean you have enough to purchase a home. Instead of depleting your entire savings account, you want to ensure you leave yourself enough money to have a financial cushion once the sale is over and done with. Anything outside of this is just risky.

5. Not looking at comparable properties

If you don’t look at the sale prices of comparable homes in your area, you risk paying too much for your home. With this in mind, dig through recent sales records to determine if you’re getting a good deal. It’ll save you financial regret down the road and assure you that you’re being smart with your money.

The First Home of the Rest of Your Life

When you purchase your first home, you’re setting yourself up for a lifetime of happy home ownership. Make sure you do it the right way by avoiding these five common financial mistakes in the process.