Buying a home is a major financial decision, and it’s important to avoid making mistakes that could cost you money in the long run.
For instance, buying my first home was one of the biggest mistakes I’ve ever made. Of course, this was also in 2007, the peak of home prices before the epic housing market collapse.
I sold the house in 2014 for $40,000 below what I had paid for it.
Of course, this won’t always happen. In fact, most of us make at least some money on our homes even though homeownership is substantially more expensive than most people think.
Here are the top 7 mistakes to avoid when buying your first home:
7 Mistakes First-Time Home Buyers Make
- Not getting pre-approved for a mortgage. This is one of the most important steps in the home-buying process. Getting pre-approved for a mortgage will give you an idea of how much you can afford to spend and show sellers that you are a serious buyer.
- Not saving enough money for a down payment. A down payment is the money you pay upfront for your home—the larger your down payment, the lower your monthly mortgage payments. Aim to save at least 20% of the purchase price of your home. Not only will this drop your monthly mortgage payments, it will also save you from Private Mortgage Insurance, or PMI.
- Not considering all of your costs. Homeownership comes with many expenses, including mortgage payments, property taxes, homeowners insurance, and maintenance costs. Ensure you factor all these costs into your budget before buying a home.
- Buying a home that’s too big for your needs. It’s tempting to buy a bigger home than you need, but it’s important to be realistic about your budget and your lifestyle. A bigger home will mean higher monthly payments, and it will also require more maintenance.
- Not getting a home inspection. A home inspection is a must before you buy a home. This will help you identify any potential problems with the property, such as structural damage or pests.
- Not negotiating the price. The asking price is just a starting point. Don’t hesitate to negotiate with the seller to get a lower price. It’s an expected part of the process!
- Not hiring a real estate agent. A real estate agent can help you find the perfect home, negotiate the price, and close the deal. They can also save you time and money.
In addition to these seven mistakes, there are a few other things to keep in mind when buying your first home:
- Do your research. Before you start looking at homes, research the housing market in your area. This will help you understand what to expect regarding prices, interest rates, and inventory.
- Get pre-approved for a mortgage. This will give you an idea of how much you can afford to spend, and it will also make you a more attractive buyer to sellers.
- Be prepared to act fast. Homes in hot markets can sell quickly, so be prepared to make an offer when you find a home you love.
- Don’t be afraid to walk away. If you’re unhappy with the price, the condition of the home, or the terms of the deal, don’t be afraid to walk away. There are plenty of other homes out there.
Buying a home is a big decision, but it can also be an exciting adventure. By avoiding these common mistakes, you can increase your chances of making a wise investment and finding the perfect home for you.
Here are some additional tips for first-time home buyers:
- Get a good real estate agent. A good agent will have much experience in the local market and can help you find the perfect home for your needs.
- Be prepared to compromise. You may not be able to find a home that has everything you want on your wish list. Be prepared to compromise on some things in order to get the home that’s right for you.
- Don’t rush into anything. Buying a home is a big decision, so don’t feel pressured to make an offer immediately. Take your time and make sure you’re making the right decision.
- Don’t be afraid to ask for help. There are a lot of resources available to first-time home buyers. Don’t be afraid to ask for help from your real estate agent, a financial advisor, or a homebuyer education course.
Buying a home is a big step, but it can also be very rewarding. By following these tips, you can increase your chances of making a wise investment and finding the perfect home for you.