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10 Mistakes First-time Home Buyers Should Avoid

Buying your first home is a big undertaking. The home-buying process involves a lot of steps and terms that you may not be familiar with and that can be very intimidating. To help simplify the experience, the experts at Union explain 10 mistakes first-time home buyers should avoid. Recognize the mistakes and learn how to avoid them.

Want to know how much you can afford to spend on a house? Check out the Union Home BuyAbility Calculator and find out now.

10 Mistakes to Avoid When Buying Your First Home

Mistake #1: Looking for a home first and a loan later 

After making the decision to buy a home, it can be tempting to look for a home first, but this is usually premature. Getting pre-approved for a mortgage serves two important purposes: it lets you know how much you can realistically afford to spend, and it shows sellers you’re serious about buying which can give you an edge over other buyers.

Solution: Gather your necessary documents and visit your local lender to begin the pre-approval process.

Ready to start the pre-approval process today? Start Union’s hassle-free application process today.

Mistake #2: Getting emotionally attached

It’s hard to completely eliminate sentimentality when buying your first home. There’s a great deal of excitement that accompanies this important milestone. When looking at different houses, you might not be able to look at it as the investment it is, but as the place you’ll host holiday parties, raise your children, or return to after a long day at work. The emotional nature of the home buying process can lead people to make decisions they wouldn’t normally make.

Solution: These feelings are normal, but it’s important to separate your emotional response from your financial decisions. Consider every aspect of the purchase and be brutally honest with yourself. If you are concerned that this is something that may be hard for you, explain your home buying ideas to someone who you trust and who can be more objective.

Mistake #3: Finding the home yourself 

If you think you can save some money by finding the home yourself, think again. With so many helpful house hunting apps and websites, many buyers are attempting to save money by cutting out the real estate agent altogether. However, there are numerous reasons that a licensed real estate agent is important, including their years of experience, inside information, and professional connections.

Solution: Hire a good, licensed real estate agent. Having an experienced buyer’s agent is especially helpful if you are looking for your first home. Be sure to get references from people or sources you can trust when deciding who you want to be your buyer’s agent.

Mistake #4: Not getting a home inspection 

When buying your first home and seeing how much everything is going to cost, it can be tempting to cut corners to lower costs. If a house seems to be in good working order, buyers might opt to save some money and skip the home inspection. However, skipping the home inspection is a corner you absolutely should not cut. Experienced home inspectors may find damages or developing issues that can cost you thousands of dollars in maintenance and repairs.

Solution: Invest in the home inspection now, to save yourself money and headaches later.

Mistake #5: Not saving enough money

Saving is an important step in the home buying process and yet it is regularly overlooked. In order to avoid the additional expense of Private Mortgage Insurance (PMI) you need to be able to pay at least 20% of the purchase price as a down payment. But that’s not all, if you’ve only saved enough for the down payment, any additional expenses, planned or otherwise, could leave you with a huge financial crisis.

Solution: Save for the down payment, closing costs, home inspection, and the first two to three mortgage payments. It may take a little longer, but it will eliminate stress and help make sure you’re buying within your means.

Want to increase your savings? Get money back when you spend with a Union Triple Rewards checking account.

Mistake #6: Not understanding closing costs

If you’re buying your first home, you may know little to nothing about closing costs. Closing costs are fees that are paid at the closing of a real estate transaction. Closing costs vary depending on a number of factors, but home buyers typically have to pay closing costs between two and five percent of the total home purchase price.

Solution: Don’t get blindsided by closing costs. Check your loan estimate to have a rough idea of what you will need to pay. Home buyers can also negotiate with the sellers to pay all or some of the closing cost. Your real estate agent can help you understand all of the options available to you.

Mistake #7: Maxing out your mortgage limit 

Just because you’ve been approved for a specific mortgage amount doesn’t mean that is the amount you should borrow. Going to the mortgage limit can put an unnecessary strain on your budget. It is recommended that your monthly mortgage not exceed 36% of your monthly take-home income. Keeping your mortgage at that amount, or below, provides you with more financial flexibility.

Solution: Plan your budget out to determine how much you should stay below your approved mortgage limit. Plan out your budget in order to determine your price range “sweet spot” within your approved mortgage limit.

Trying to plan your monthly mortgage payments? Check out our Loan Term Calculator.

Mistake #8: Failing to consider additional expenses

Your home expenses don’t end after you’re done with closing costs. Homeowners have numerous expenses that need to be factored into your monthly budget. You’ll be responsible for property taxes, homeowners insurance, home owner’s association (HOA) fees, and home repairs – just to name a few. First-time buyers may not be familiar with these expenses and might forget to consider them in their decision.

Solution: Budget for not only the mortgage but any additional expenses. If you find that you can’t afford these additional costs plus the mortgage payment, then this house might be too expensive for you.

Mistake #9: Lacking vision 

When shopping for your first home, don’t narrow in on cosmetic issues that can easily be updated down the road. If you hate the carpet in the upstairs hallway, but the home meets your larger requirements that are more difficult to change, like size and location, don’t immediately reject the house. Buyers can miss out on excellent homes this way. Even if you can’t afford to change the carpet right away, it might be a good idea to live with the smaller imperfections for a little while. Additionally, doing home improvements yourself, or even hiring a contractor, can cost less than paying the increased home value on a picture-perfect home.

Solution: Start planning for the changes you want to make ahead of time. Begin saving now and down the road you’ll have more options to make your home perfect.

Mistake #10: Not planning for the future/doing due diligence on the neighborhood

The quality of a neighborhood can have a big impact on both the value of your home’s property and your happiness with where you live. Doing your due diligence on the neighborhood you’re considering can save you a lot of future problems.

Solution: Answer these important questions before making an offer:

  • What is the school district’s reputation?
  • What development plans are in the works for the neighborhood and surrounding area?
  • Is the street going to become a major street or a popular rush-hour short cut?
  • Will a highway be built in the back yard in the near future?
  • Have home values in the neighborhood been declining?
  • What is the area’s crime rate?

Ready to get started?

There is a lot that goes into buying your first home with plenty of chances to make a mistake. Count on our team of experts that have been there before and can help make the process as simple as possible. The Union mortgage team offers client focused services from first contact to closing.

Ready to work with the mortgage experts that put you first? Start our hassle-free application process today.

Want to learn more about Union’s mortgage options? Visit one of our 14 local branches or check out our home mortgages page for more information.

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