Buying your first home should be one of the most exciting moments of your life. Home ownership is intertwined with the American dream, and most new buyers are left with a glow and sense of pride that can’t be replicated.
But first-time homebuyers are prone to make mistakes, too. It’s only natural to take a few missteps as a first-timer, but, sadly, most of these mistakes can be easily avoided with a little research ahead of time.
In our experience, first-time homebuyer mistakes fall into three broad categories:
- Emotions and Expectations
Here’s a closer look at these three categories and the specific first-time homebuyer mistakes you’ll want to avoid.
Mistake No. 1: Not Getting the Guidance You Need
How often in life do you invest in something with a six-figure price tag? Not often. And, in fact, chances are good that a home purchase will be the largest investment you ever make.
Given how important a home purchase is, you must have a real estate professional by your side who is: 1) helping you make the best decisions at every turn, and 2) fully committed to your unique needs — and no one else’s.
One of the big traps first-time homebuyers fall into is using the seller’s agent as their own agent. For example, a young couple passes a beautiful home and notices a “for sale” sign out front. They call the number and speak to an agent, who offers to show them the home. They love it. And, before they know it, the seller’s agent has become their agent, too.
Here’s the thing, though: No agent can fully look after the best interests of a seller while also looking after the best interests of a buyer. In a real estate transaction, concessions are agreed upon, terms are negotiated and important decisions are made. You need someone who is representing you and only you during this important process.
And there’s little to lose financially when you use your own agent as a first-time homebuyer: The seller almost always pays the commissions.
Mistake No. 2: Failing to Check the Financing Available to You
You want to be as ready as possible when your dream home comes on the market. That’s why you need a mortgage preapproval letter, which is a simple document you can likely get in just an hour or two.
It works like this: Call a mortgage representative, who will spend about 20 minutes asking you basic questions about your situation, your employment and your income. After getting your information, the representative should be able to preapprove you for a mortgage up to a certain amount.
Why is this important? Because a preapproval letter gives you an authority when making offers. It demonstrates that you are qualified as a buyer (and perhaps more qualified than other buyers), and it also shows your intent — just the fact that you took the time to get a preapproval shows the seller that you’re serious.
A good real estate agent should be able to recommend several lenders in your area. Make sure to talk to a few different lenders to ensure you’re getting the best possible rates.
And, finally, be sure to count the full cost of ownership before you make an offer that maxes out what you’re approved to borrow. You’re going to be responsible for a down payment and closing costs. And then you’ll also pay taxes and insurance each month (or each year) after closing.
If you have a homeowner’s association or if you pay private mortgage insurance to make up for a smaller down payment, your monthly obligation will start to add up. And don’t forget about any updates you want to make to the home when you move in, as well as regular maintenance and ongoing upkeep. Owning a home can start to feel expensive.
Which is why it’s not always a good idea to borrow every last dime made available to you. That is, you may get a preapproval for $300,000 — but it may be smarter to spend closer to $200,000 or $250,000 so that you have breathing room to comfortably pay for everything else.
Mistake No. 3: Getting Frustrated by Emotions and Unrealistic Expectations
We are all human, which means we can all get emotional. And emotions run particularly high when it comes to an important investment like buying a new home.
It’s easy to fall in love with a home and be tempted to spend more than you know you should. It’s also easy to fall in love with one aspect of a home — a tree house that would be perfect for your kids, proximity to family, etc. — and to let that one aspect blind you to other things about the house that aren’t so great.
One thing you should do before you start looking seriously: Make a list of “must-haves” and “nice-to-haves.” Your must-haves are the things that are non-negotiable — the features, characteristics and qualities that a home must have for you to consider it. A good agent can counsel you on which must-haves are reasonable and which are not. Your list of nice-to-haves should include features, characteristics and qualities that you would like but that don’t necessarily represent deal-breakers.
When you feel the emotions setting it, this list can help bring you back down to earth, where you can make a rationale decision about a home. Which brings me to the next part of this: expectations. We all want the home of our dreams. But keep in mind that you’re a first-time homebuyer. When you set expectations too high, you often find that you’re disappointed by the realities of the market. Try to find a dream home for the present or for the next three to five years. Then, once you’ve built up some equity, you can check the market again to see if you have the buying power needed to get into your all-time dream home.
And, lastly, be prepared for the unexpected. You’re looking for the perfect home at the perfect price. And, at the same time, all buyers are looking to maximize the sale prices of their homes. There’s inherent tension in the transaction, and that can lead to tough negotiations, challenging decisions — and churning emotions on both sides.
Be patient. Trust your agent, and lean on his or her experience and knowledge. In time, if you can avoid some of these common first-time mistakes, your search for a home will end with happy results.
Get Started With the Right Agent
At Carney & Dement, we work each day with both seasoned and first-time homebuyers. We fully understand these common mistakes, and we strive to help our clients avoid them at all costs. Your goals become our goals, and we do everything we can to help you find the perfect home in Jackson, TN or surrounding areas.
If you’re searching for homes in Jackson, TN, we’d love to talk to you. Contact us today to learn more about how we can help you find the perfect home.