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Top 5 First Time Home Buyer Mistakes!

Updated: Mar 9, 2021

So, you are thinking about buying a home and not really sure where to begin? Right now more than ever, you need to do some research upfront before taking the leap of homeownership.

Here are the top 5 common mistakes that first time home buyers make.

1) Taking on new debt while you are under a contract

When you are first starting out looking for homes, you’re going to be working with a lender to figure out what type of loan you qualify for. Lenders will want to look into how much you can afford, the best interest rate they can get you, and your financial background.

One of the big things they are looking at is your debt to income ratio which is basically how much debt is going out and how much debt is coming in. They want to make sure that you can make the monthly payments with the debt you already have in place.

Once you go under contract, you basically want to live in a hole until the closing is over. If you go out and accumulate new debt after going under contract, it could throw everything off.

A quick example here would be If you go out and buy a brand new car or buy all new furniture on your credit card before closing. The lender will do another credit check to make sure everything is about the same as when they approved you to begin with. If you make a big purchase, it could eliminate you from getting the loan. It's best to make large purchased until after the closing!

2) Being unrealistic

I tell this to clients all the time, there is no such thing as a perfect home. When you find the home that you like, there are going to be some things that you are just going to have to compromise on. I usually say if you can check 4 out of the 5 boxes, then usually that's a good indication that the home is a good fit. Here are some quick things to consider when looking for a home:

  • Commute time to work

  • Type of school districts

  • How big the house is

  • Try not to focus on cosmetic things, because those are things that you can change. You really want to focus on things you cant change like the layout of the house or the houses location.

3) Not getting pre-qualified for a loan

I get it, you want to go look at houses now. But what you want to do before you go house hunting is to get pre-qualified. You will want to know what type of loan you are going to get, what your payments will look like, what your interest rate will be and if there are things you need to work on to get a better rate, etc.

If you go out house hunting to find the home of your dreams and then realize you can’t actually get approved for that house, its going to be heartbreaking. Here is why