When searching for your first home, it’s easy to get caught up in the excitement. There are so many possibilities — from home styles and locations to decor. You may already have a Pinterest board or two dedicated to what your ideal home could look like.
In order to help you find the perfect fit as painlessly as possible, be sure to avoid these first-time homebuyer pitfalls:
1. Skipping pre-qualification. Before you can truly know what a bank is willing to loan you for a home, you must get pre-qualified for a mortgage. Otherwise, you could end up wasting your time, the agents’ time and even several thousand dollars if the deal falls through because you can’t get financing. Knowing what number you have to work with will help keep the expectations on solid ground.
2. Not crunching the numbers. Just because a bank approves a certain mortgage amount doesn’t necessarily mean you should borrow the top end of the price range. Banks use debt-to-income ratios to determine ranges and don’t factor in the expenses you can’t live without like cable, Netflix, a Crossfit membership or frequently dining out.Knowing what you can afford means factoring in the monthly extras that can really add up fast.
3. Putting too much stock in online home evaluations. According to Bankrate.com, home-listing sites like Zillow and Trulia can be off by a large percent, creating unrealistic expectations for both buyers and sellers. Use these sites as a benchmark, but not the be-all end-all in a home’s valuation. Only a licensed appraiser can provide a true and accurate evaluation.
4. Making decisions based on projected income. If you or a spouse are still in school, it’s easy to project you’ll be making a significant amount more in coming years, and want to take on a heftier mortgage with this future pay increase. Although planning for the future and looking forward are important, you must not overestimate how much you’ll be making.takes a little longer to landing that amazing job or promotion you’ve been working toward could take longer than expected.
5. Being hasty. Don’t wait until you’ve turned in your 30-day notice to your landlord to start looking for a new home. Even if you have one in mind and are ready to make an offer, the purchase to close process takes an average of 38 days, but can take much longer in some cases. Be sure you give yourself plenty of time, even agreeing to go month-to-month on your lease in order to make this financial commitment without being rushed into a hasty decision.
6. Not factoring in costs beyond the mortgage payment. There are several additional costs you need to factor in besides just the mortgage itself. Homeowners insurance, homeowners’ association fees, property taxes, closing costs -- you get the idea. If your down payment is less than 20 percent of the home’s price, you’ll also be required to pay private mortgage insurance (PMI) each month until you’ve paid off at least 20 percent of the home loan. Some closing costs can be negotiated, but you’ll more than likely still need to cover a few thousands dollars’ worth. Use mortgage calculators that factor in your interest rate, PMI, closing costs and all the other expenses that can really add up.
7. Opting out of the home inspection. Looks can, and often are deceiving. A home inspection that costs a couple hundred dollars could save thousands in the long run. Or even the short run. You could even dodge the proverbial bullet if some serious problems are lurking beneath a home’s surface. Be sure to use an inspector you choose independently, not one that comes recommended by anyone involved in the transaction.
8. Forgetting the first three rules of real estate (location, location, location). If you do find your dream home and it’s outside of your dream neighborhood, make sure you’re willing to make that sacrifice before committing. Consider longer commute times, less walkability and other factors that may offset the deal you’re getting on your home. Sometimes it’s worth living a little outside of your ideal neighborhood, if the price and house are great.
9. Being unwilling to compromise. In most cases, first-time homebuyers will have to cross a few things off their wish list, mainly due to budget. If this happens, don’t lose heart. They’re called starter homes for a reason. Before you start looking, create a list of the must-haves and nice-to-haves to help guide your decision.
10. Compromising on the things that matter most. Do you really need a third or fourth bedroom? If you’re planning on starting a family or adding to your existing one, be sure to factor in room to grow. How important are neighborhood amenities, like nature trails, pools and fitness centers?
Whether it’s the first time or not, buying a new home can be a very exhilarating experience. It’s best to take your time, know your numbers and remain open to all options.
For information on affordable new homes available in Nocatee, visit the Nocatee Welcome Center or call 1-800-NOCATEE.