According to the National Association of REALTORS® (NAR), first-time homebuyers are the fastest-growing segment of the market. If you’re exploring the spring market and hoping to find your first home, it’s important to be educated, curious and to work with local market experts. Here are five mistakes that first-time buyers commonly make, and how to avoid them.
1. Relying on online information only
It’s easy to assume that the internet knows all, and we understand the appeal of doing your own research. But the reality is that buying a home is likely the biggest purchase you’ll ever make, and it’s also an extremely personal one.
Many first-time buyers start out by researching homes online, getting pre-qualified online and attending open houses to see what’s available. This is a great introduction to the home-buying process, but it’s also important to have local experts by your side.
At Edina Realty, we have more than 2,300 licensed, professional Realtors who can guide you through the process of buying a home, and our Edina Realty Mortgage loan officers will help you find a loan that best fits your personal financial situation. Every homebuyer is different, and so are their needs and wishes. Once you’ve completed your initial online research and prep work, reach out and we’ll connect you with local professionals who have way more to offer than online calculators and forums.
"When I met my agent for the first time, he was immediately very helpful and prompt, offering materials about the property I liked, and advice on the procedure of buying my first home. He also made it fun and interesting. We were laughing most of the time, which made it all the more exciting to find my new place."
– A recent Edina Realty first-time buyer
2. Not having the right paperwork
To stand out in this low-inventory market, it’s important to get preapproved by a lender in advance. By having a lender-approved estimate of your buying power, you can confidently search for homes in your true budget. Sellers and their agents may also take you more seriously if they know that you can obtain the necessary funding to buy the home.
Your agent can help you get preapproved, or request to get preapproved by an Edina Realty mortgage loan officer.
3. Focusing too much on the down payment
If you’re planning to buy soon, you likely have a nest egg saved away for your down payment. While this is an important part of getting a loan, lenders will also closely scrutinize your debt-to-income ratio. This ratio assesses how your debt will impact your ability to pay your mortgage principal and interest, and home taxes and insurance.
Your mortgage loan officer can help you determine if you need to lower your debt obligations in order to secure a mortgage. From there, you can pay off higher than the minimum on credit card payments and installment loans, like student loans, car loans or even child support payments. Additionally, it’s important that you not take on new debt, so avoid purchasing a new car, large electronics or other expensive products when applying for a loan or buying a home.
4. Moving too slowly
As prices grow and first-time buyers enter the market, low-priced listings (often called “starter homes”) can be scarce. In conditions like these, buyers may have to move quickly—but anyone who has bought a home will tell you not to rush into it. So, what’s a buyer to do in this unique, low-inventory market?
This is where your agent’s advice will come in handy. Together, you can identify the “must-have” features of your future home, then tour a few homes to get a feel for what is realistically available in your price range. When you know what’s most important to you, you’ll be able to quickly disqualify homes that aren’t right, and make a faster offer when you walk into the home you’ve been waiting for.
5. Saving money by forgoing a home inspection
Many buyers start to get sticker shock as they calculate the cost of the closing, home insurance, taxes and future upgrades. While it can be appealing to nix some home-buying costs, it’s vital that buyers go through with a home inspection.
According to NAR, 92 percent of buyers go forward with a home inspection before closing on a home—that’s company you want to keep. By hiring a professional to inspect the home, you can be sure that the systems and appliances are in working order and that the home is free of issues related to foundation, ventilation, roofing system, water damage and more.
The American Society of Home Inspectors says that the average cost of a home inspection is $450. While that may seem like a lot, most issues or defects identified in the inspection would cost much more than that to fix down the road.
The market is hot for first-time buyers, but playing the game smart is the key to your home buying success. To get started on buying your first home, call, email or chat and we’ll provide insights that will help you avoid the above mistakes and secure the home you’ve been waiting for.