10 First-Time Home Buyer Mistakes and How to Avoid Them
Are you thinking about buying your first home? Congratulations! The home-buying journey can be exciting, but it can also be stressful, especially if you don’t have faith in what you’re doing. Rightfully so – making a mistake now can cost you well into the future. You should be confident in your decisions so you can enjoy the process of finding your new home – here are the top 10 mistakes to avoid when you’re buying your first home.
- Buying a more expensive house than you can afford. It can be tempting to stretch yourself when you see a house that you really love, especially if it checks all your boxes. But that could set you up for financial problems going forward. Set a budget before you start looking at homes, and stick to it! Don’t look at houses that are out of your budget and run the risk of your emotions taking over. Talk to a loan officer at Piscataqua Savings Bank to figure out how much you can afford to pay each month and work with that limit.
- Emptying your savings account on the down payment and closing costs. Closing is expensive, but you’ll still need an emergency fund after closing. All kinds of incidental expenses could come up during moving and when you first move into your new home. You could discover that you need to replace an appliance, find damage that needs to be repaired, etc. You never know what could happen, so leave yourself some wiggle room.
- Looking for a house before getting pre-approval from Piscataqua Savings Bank. It’s a highly competitive housing market, and if you haven’t been pre-approved, chances are that the sellers won’t even consider your offer. Having pre-approval will show that your offer is serious. Don’t take the chance of missing out on your dream home because you waited to reach out about pre-approval.
- Not planning ahead. Having an excellent credit score will help secure you a better interest rate, which could save you money in the long run. Buying a home isn’t a process you should rush – take your time, be patient, and do it right. Talk to a loan officer at Piscataqua Savings Bank to learn what you can do to improve your interest rate.
- Waiting for the “perfect home.” Chances are you have big dreams about what your first home will be like. However, expecting perfection can limit your options in the housing market. It can also lead you to spend more than you can afford if you do find that perfect place and it happens to be out of your budget. Keep an open mind when looking at houses, and remember you can make changes.
- Not paying a high enough down payment. You don’t need to put down 20%, but you can save money on mortgage insurance if you do. A higher down payment will reduce the total of your loan, which means a lower monthly payment. Make sure you have saved enough money to put down that you can afford your monthly payment.
- Ignoring first-time homebuyer programs. The government and non-governmental agencies offer a variety of assistance programs for first-time homebuyers, as well as buyers without enough savings to make a full down payment. Do your research to find out if one of these programs could be a good fit for you.
- Applying for credit before the sale is final. Making larger purchases or opening credit before your sale is final is a big mistake. Your lender will do a final credit check in the week leading up to closing, and if your credit score has dropped that could raise a red flag. Wait until after closing to buy furniture or appliances or open a new credit card.
- Miscalculating the monthly cost of homeownership. If you’re just considering your monthly mortgage payment, you could be in for an unpleasant surprise. Monthly expenses may be higher than you’re used to paying as a renter. Property taxes, home insurance, repairs and maintenance, snow removal, and heating costs can really add up. Get estimates for insurance and property taxes, and leave a wide cushion in your monthly account planning.
- Settling for the wrong house. While some buyers overlook perfectly good homes in search of the “perfect home,” still others settle for the wrong house. Viewing home after home can get exhausting and overwhelming, and it can become tempting to just pick one. Make sure you’re not giving up on the things you know you want in your home. Take as much time as you need and wait for the right home.
At Piscataqua Savings Bank, we take pride in being one of the Seacoast’s leading home mortgage lenders. We’re there for you with clear and prompt communication during every step of the process. Learn more about our home mortgage lending program here.