5 Common Mistakes First-time Homebuyers Make

One thing is sure about first-time homebuyers—They are excited and prone to make a lot of mistakes. 

Sure, life is learning from our mistakes. However, life is even better if we learn from the mistakes of others. That way, we save ourselves a lot of time and money. 

Today, we'll be exploring the common mistakes made by first-time homebuyers. In addition to that, we'll also come up with ways you can avoid these mistakes and make better decisions. 

1. Signing a mortgage with the first lender you meet

We advise you to try your best and contain your excitement. Always take your time. It's not every day you buy a house. 

The majority of homebuyers sign mortgages with the first lender they come across. That's the biggest mistake you can make in the homebuying process. 

Why? Because you might end up leaving a lot of money on the table. 

The more money you leave on the table, the lesser your options. If you are not careful, you'll miss out on your dream home.

The best call: We advise you to go around and shop for mortgages from at least five different lenders.  

Most first-time homebuyers think they don't have any power when shopping for mortgages—Remember, it's up to the lenders to impress you with the best rates, fees, service delivery, and loan terms. 

2. Shopping for a house without a pre-approved mortgage

Almost all first-time homebuyers make this mistake. Most of them think they can shop and tie down-home before securing a mortgage. 

First, you'll be wasting your time looking at houses that are way beyond your budget. After all, the mortgage isn't approved, and you don't have a fixed budget to work with. 

Second, nothing is worse than losing a house you are in love with. Most first-time buyers tend to forget one crucial fact—The demand for neat affordable homes is always higher than the number of houses available in the market. 

Also, after falling in love with "the house that got away," all other houses will be second-rate—You'll never really be satisfied with any decision you make after losing that house. 

The best call: You should only shop for houses after your lender has approved the mortgage. That way, even sellers will take you seriously. 

Having a pre-approved mortgage will also help prevent overspending. You'll know the houses you can afford and avoid the temptation of expensive homes.

3. Buying a house you can't afford

Remember, you still have a life to live after buying the house. When shopping for a home, discipline is crucial.

Expensive houses will always appear to be better than cheaper homes. Well, and good if you can afford it. Just don't go beyond your budget and into a financial pit. 

Have you ever heard of foreclosure? It's a legal process where your lender tries to get back the money they lend you since you failed to pay your mortgage. Not only will you drown in debt, but you'll also lose your dream house. 

It's even worse if you end up spending all your savings on the down payment and other costs. You never know when a financial crisis (like unemployment) might come your way. Such a move is dangerous and quite silly. 

The best call: First, you need to be honest with yourself. How much can you comfortably afford with your current level of income?

Next, before committing yourself, make sure you have a financial cushion—Have at least six months of expenses saved up in your emergency account. 

4. Skipping the inspection process

Let's assume you've followed our advice and managed to land "the perfect house." Don't buy the house just because it feels well with your soul. 

We've seen so many first-time homebuyers lament over a house they picked as their first choice. 

Why? Because they missed a lot of hidden maintenance issues. Sometimes, even the floor plans are fake.  

We know the real estate market is fast-paced. We know some of you are afraid of losing their "dream house" because of an inspection clause. 

Trust us, the extra $300 to $800 for inspection is worth it. Sellers are becoming cheekier by the day. They might successfully hide flaws from your inexperienced eyes. On the other hand, home inspectors are well trained and can even detect if the house is haunted (Jokes). 

All in all, a professional house inspection is crucial.

The only time you may be able to avoid it is when you're buying a brand new home from a reputable builder like Ballymore Homes. Such properties lack wear and tear. As for manufacturer defects, they're typically covered by warranties. 

The best call: It's simple. Always inspect the house before you purchase, or at least make sure a warranty exists to cover you in the event something goes wrong. 

What if you find yourself in a bidding contest against a buyer who is ready to forgo inspection?

Here is a smart idea. Request your real estate agent to book at least two hours for buyer viewing. During those two hours, hire a professional home inspector and let him or her do the job. 

While you are it, you should also check out the neighborhood. 

Is it close to your workplace? Are there good schools for your kids? What about the hospitals and burger places? The right house must be in the right place. 

5. Underestimating the hidden costs of owning a home

Most first-time buyers think the downpayment and monthly installments are the only costs of owning a home. You'll be shocked. 

As a homeowner, you should also consider other expenses like mortgage insurance, property tax, and maintenance costs. 

Did you know that the average homeowner spends $2000 annually on house maintenance?

The "homeowner" status comes with a lot of responsibilities. If you are unprepared, you might find yourself in the financial pit we talked about.  

The best call: Before signing up for the "homeowner" role, sit down with your financial advisor and try to factor in all the costs of owning a home. Can you handle the expenses? 

We advise you to set aside or save at least 1% to 2% of the home's buying price. Use the money for the annual repairs and maintenance fees.