Updated: May 31
Embarking on homeownership for the first time is both an exciting and anxiety-ridden process. Below, we share some common mistakes homebuyers can potentially make during the home-buying journey so you can avoid unnecessary stress and enjoy the process!
Not getting pre-approved:
Homebuyers will often start the process by looking at homes without taking the time to talk to a lender and get pre-approved for a loan. This is an important step as it allows you to establish your price range and narrow down your property search, saving you time and energy in the long run. A pre-approval letter will also raise your awareness of any issues that may prevent you from securing a loan. And perhaps most importantly, you will be recognized as a serious buyer and increase your chances of winning the bid.
Not considering future needs:
Many first-time homebuyers make the mistake of not looking ahead to their future needs and wants in a property. You should ask yourself if you might need an extra bedroom or bathroom down the line, or whether you will entertain guests often enough to necessitate certain features like outdoor space or a larger dining area. This is an area where a Copia real estate agent can help; we see so many houses in various stages of repair and updating. Keeping any renovations you may want to make in mind during the home-buying stage will ensure you have found the right home for both now and your future.
Not getting a home inspection:
In recent years this has been a popular step skipped by home buyers in an effort to win the bid. Before going through with the purchase of a home, it is important to have an inspector come out and check for any faults or necessary repairs so you know what you are getting into before signing on the dotted line.
Not shopping around for financing options:
Different lenders offer different rates and terms ⎯ it is important to shop around for a financing option that fits your budget. Don’t be afraid to negotiate with the lender on any fees or points you may have to pay. A big part of the financing puzzle is figuring out how much of a down payment you can afford and exploring lender options from there.
While you do have the option to put down less than 20%, a down payment of at least 20% will increase your chances of being approved for a mortgage at a reasonable rate and allows you to avoid private mortgage insurance (PMI). A lender can also base their down payment requirements on the borrower’s credit history. Minimum down payment requirements vary depending on the type of loan:
FHA loans require as little as 3.5% down. The Federal Housing Administration backs these loans.
VA loans do not usually require a down payment and are guaranteed by the U.S. Department of Veterans Affairs. These loans are available to current and veteran military service members and eligible surviving spouses.
USDA loans do not require a down payment and are backed by the U.S. Department of Agriculture’s Rural Development Program. These loans are available to home buyers that meet the program’s requirements, such as income limits.
Some conventional mortgages require as little as 3%. These loans are made available through programs like Fannie Mae HomeReady. They are not backed by the government but adhere to guidelines set by the government-sponsored enterprises Fannie Mae and Freddie Mac.
Coming up with $60,000-$100,000 for a down payment is a daunting task for many, but
there are some significant advantages to consider when having a larger down payment:
A better mortgage interest rate
A lower monthly payment
Lower upfront and ongoing fees
Avoid PMI with at least 20% down
More equity in the home immediately
Not researching local market trends:
Before making an offer on a property, make sure you know what is happening in the local market. Do some research on how long houses are taking to sell and what price they are going for in order to make an offer that will be accepted. This is where having a qualified real estate agent gives you a huge advantage. An agent can guide you with expertise in the area where you want to move. They will provide both the pros and cons of owning a home in the area as well as all the statistics we mentioned above.
None of these mistakes will prevent you from buying a home BUT they could delay the process. By keeping these five common mistakes in mind, you can rest assured that your home-buying journey will go a bit smoother! Good luck!