Common Mistakes Made By First-Time Homebuyers And How To Avoid Them
Buying your first home can bring joy for the whole family as you get to build a new life together and create beautiful memories in a cozy new house.
However, many first-time homebuyers are unaware of the uncertainty of the home buying process, which often leads to making bad mistakes.
These mistakes can cost thousands of dollars, moments of frustration, or even heartbreak as they lose out on their dream home. Therefore, it’s essential to tread carefully and seek advice from a professional when buying a home.
So, to help you avoid some basic errors that could prove to be costly, Darrell Alexander Mortgage Broker has put together a list of the most common mistakes made by first-time home buyers and how to resolve them.
1. Not talking to a mortgage broker or a bank
Buyers who finance a home they can’t afford are likely to have limited funds left over for things like travel, leisure emergencies, or home repairs.
So, it’s vital to decide how much you want to spend on a home, and how much you can realistically afford. Remember, you don’t have to accept the maximum amount that is offered to you. Many first-time buyers aim to buy a house with a convenient monthly payment that won’t keep them up at night.
Talk to a mortgage broker to discover how much you can comfortably afford to spend on a home and adhere to a realistic budget. They will also help you evaluate your closing costs, so you know how much money you will require upfront before you even start paying your monthly mortgage.
2. Not getting pre-qualified for a mortgage
It’s more joy to look at homes than it is to talk about your finances with a lender, and that’s exactly what many first-time home buyers do. They scour for properties before finding out how much they can borrow. Then, they are discouraged when they learn they are looking at the wrong price range.
Therefore, getting pre-qualified for a mortgage is essential if you’re seriously considering purchasing a new home. It can help move the process along faster once you find the perfect house and indicate to sellers that you are a serious buyer.
Speak to a mortgage expert about getting pre-qualified or even pre-approved for a home loan before you start to shop for a place. The pre-qualification or preapproval process includes a review of your income and investments, and it can make your bid more concrete as you’ll be able to prove to sellers that you can back up your offer.
3. Switching jobs in between the mortgage approval process
People shopping for a new home are often planning to relocate to start a new job. However, changing jobs amid the mortgage process can complicate things. If you got pre-approved for a mortgage based on a regular income and employment, any changes in the interval before closing can be a red flag and delay your closing.
For approval, you generally must provide evidence of two consecutive years of steady employment and income. When you switch jobs, your regular payment record gets disrupted, mainly if you take a lower-paying job.
Also, if you change to a role that pays twenty-five percent or more of your salary in commissions, you must prove you’ve made that income over two straight years. Whenever possible, lenders suggest waiting to switch jobs until after your loan closes. If that’s not doable, tell your lender right away.
4. Not hiring a real estate agent
Trying to look for a place on your own is time-consuming and complicated. A professional real estate agent can help you narrow down your options and point out issues with the physical property and the mediation process with sellers.
Also, if you go on showings without your own real estate agent, a seller’s broker might offer to represent you. It can be tricky as that agent doesn’t have your interests in mind, and their sole aim is to attain the highest and most desirable offer for the seller.
Having an independent agent whose interests are more aligned with yours will support you in making more informed decisions. Best of all, the cost of hiring an agent won’t come directly out of your pocket. As a buyer, you generally don’t pay the agent’s commission. The seller usually pays it to the seller’s agent, who then splits the share with the buyer’s agent.
5. Not considering all the costs
It’s crucial to keep calculating the home price, closing costs, the down payment, and future mortgage payments. However, what’s often forgotten by first-timers are the moving costs. You don’t want to be overwhelmed by any unforeseen expense so understand your financial position and what additional payments are needed to be paid.
It’s best to be honest with your lender or mortgage broker about your finances, as you'll be the one paying the mortgage, and you don’t want to struggle with a bill you can’t afford.
On a final note, the home-buying process can be confusing, and things may happen that you weren’t expecting. So, do your math before making an offer, stick with your goal, and hire an expert mortgage agent.
At Darrell Alexander Mortgage Broker, I’m an experienced mortgage agent in Lethbridge, Alberta that can help you find the right mortgage and guide you through the home-buying process. I have access to over fifty banks and lenders to ensure you receive the best rates, mortgage conditions, details, and customer service.
I’m here to solve all your queries and to make the home-buying journey as smooth as possible. For a comprehensive list of services I provide, please click here. For any topics related to our mortgage offerings, please feel free to contact me by clicking here.