TOP MISTAKES TO AVOID WHEN BUYING A HOME
Purchasing a home involves accomplishing several key steps while avoiding several key pitfalls. Be sure to interview and hire a qualified agent who can help you protect your finances, make sure you’re considering your future needs and assist you in thoroughly researching both the home and the area. Avoiding these mistakes below will insulate you from many issues that can arise and set you up for an incredible real estate experience
Skipping Professional Help
Trying to save money by not hiring an experienced real estate agent can result in costly mistakes. An experienced buyer’s agent will provide invaluable industry insights, protect your best interests and help negotiate the best possible deal that accommodates YOUR wants, needs, loan type and timeline.
How this affects you:
Without expert guidance, you risk significantly overpaying, overlooking critical details, and struggling during negotiations, which can lead to higher costs at the closing table and beyond. Also, purchasing a home with overlooked structural issues may turn it into an immense financial burden, potentially making it difficult to sell for a profit in the future. Take the time to interview several agents to find one that you connect with and feel is the most qualified professional to represent your goals.
Not Getting Pre-Approved for a Mortgage
Receiving your Pre-Approval letter BEFORE actively shopping for homes greatly protects your precious time. You won’t know what your comfortable price point is, and most Sellers will not entertain an offer without this letter.
How this affects you:
You run the risk of falling in love with homes that are not within your budget (i.e. you don’t actually qualify to purchase it) or not having your offer considered at all. Streamline your experience and receive YOUR PRE-APPROVAL today. (Links to Financing Tab on ‘BUY’)
Talking to Only One Lender
Expert Lenders are competitive and know it's in your best interest to shop and compare loans. First-time buyers often get a mortgage from the first (and only) lender or bank they talk to, and that’s a big mistake. By not comparing loan offers, you may miss out on lower interest rates, better terms, or reduced fees, which can save you thousands over the life of your mortgage.
How this affects you:
Lenders offer different rates based on factors like credit score, loan type, and market conditions, so shopping around ensures you’re getting the best deal. Even a small difference in interest rates can result in significant savings. Taking the time to compare offers could lower your monthly payments and overall costs, protecting your long-term financial health. Try to obtain rate quotes all on the same day since rates change regularly. Don’t discount customer service and lender responsiveness because both play key roles in making the mortgage approval process run smoothly.
Skipping the Home Inspection
Waiving a home inspection to speed up the process or save money can backfire. Inspections reveal hidden issues for everything from electrical, plumbing and pest infestations to foundation and mold/mildew issues that could cost you significantly after purchase.
How this affects you:
Your Home and Moisture & Termite Inspections allow you to discover exactly what you’re purchasing BEFORE you close on the home, and give you an opportunity to negotiate repairs, or in cases of significant damage, remove your offer and walk away. This small investment is a powerful tool in your belt to protect yourself against unwanted and expensive repair surprises in the future.
Overextending Financially
Buying at the top of your budget can leave you financially vulnerable. Factor in your long-term financial goals and potential future expenses. Consider all costs, including property taxes, homeowner's insurance, maintenance, HOA fees, and closing costs. Don't forget expenses associated with the move itself; the cost of a moving company, turning utilities on, purchasing window blinds and curtains, and stocking your new fridge & pantry with groceries are among a few early expenses.
How this affects you:
Not adhering to a comfortable budget risks you becoming “house poor”, leaving you with little financial flexibility and added stress. This can limit your ability to enjoy a lifestyle that includes savings, travel, or "fun money." Discussing all of your monthly expenses with your lender will help ensure you're not overextending yourself financially. By doing so, you can make a home purchase that supports your overall financial health and your desired quality of life.
Assuming You Need a 20% Down Payment
The long-held belief that you must put down 20% in order to purchase a home is often a myth. While a 20% down payment does help you avoid mortgage insurance, many buyers today don’t want to (or simply can’t) put down that much money. In fact, the typical down payment on a home was 8% for first-time buyers in 2022, according to the National Association of Realtors. Some communities like co-ops or condos could still require a larger down payment, so check with your lender about down payment costs, and your real estate agent about specific community requirements and budget accordingly.
How this affects you:
Delaying your home purchase to save up 20% for a down payment could take years. It could also limit your ability to achieve other financial goals, such as maximizing your retirement savings, adding to your emergency fund, or paying down high-interest debt. Ask your lender about other mortgage options you might qualify for. You can put as little as 3% down for a conventional mortgage, and FHA loans only require 3.5% down if your credit score is 580 or above. With some other types of loans, you might even be able to secure a mortgage with no down payment at all. Check out this article on Mortgage Loan Types that will help you prepare as you interview Lenders and move forward on your journey. (Links to respective Tab on ‘BUY’)
Not Researching the Neighborhood
A home in a poor location or declining neighborhood may actually depreciate in value. A trusted realtor will help you with the resources you need to research schools, crime rates, amenities, and future development plans. It’s always in your best interest to drive the area at night and on weekends to get a feel for the environment you’ll soon call home.
How this affects you:
Purchasing a home in a declining area can immediately expose you to risks such as higher crime rates, inadequate services, and a diminished quality of life. In the long run, these factors can lead to property value depreciation, making it difficult to resell your home. This may prevent you from leveraging your home’s value to upgrade your lifestyle in the future, or downsize when needed. Choosing a home in a stable or improving neighborhood is essential for both personal security and long-term financial growth.
Making a Low Offer in a Competitive Market
Lowballing in a hot market can cause you to lose a desirable property. Sellers in a strong market often receive multiple offers, and a low offer may be outright dismissed quickly in favor of more competitive bids.
How this affects you:
Regardless of the market, in the event that a low offer IS considered by the Seller, this tactic can reduce your chances of negotiating other terms including repair requests and closing costs assistance. To avoid losing your negotiating power, or the deal altogether, it's important to create a win-win scenario by making a well-informed, reasonable offer based on recent comparable sales and the current market conditions.
Focusing Solely on Aesthetics
When evaluating a home, it's essential not to get distracted by cosmetic details like paint color or outdated fixtures at the expense of more critical factors such as structural integrity, functionality, and location. Superficial issues like chipped paint or dated appliances are relatively easy and inexpensive to fix. However, foundational or structural problems—such as roof damage, plumbing issues, or poor insulation—can be much more costly and time-consuming to address.
How this affects you:
While it’s tempting to focus on elements like modern paint colors, new countertops or updated fixtures, overlooking foundational issues such as electrical systems, roofing, or plumbing can result in unwanted and significant expenses later. Furthermore, functional and location-based concerns, like poor layouts or undesirable neighborhoods, can reduce your home's long-term livability and resale value significantly.
BOTTOM LINE:
Buying a home is an exciting, significant milestone with many steps. Thankfully, you can avoid costly mistakes altogether. By partnering with a trusted Realtor from the start you will have fiduciary guidance through the entire process, helping you make informed, confident decisions all along the way.
