8 Tips to Avoiding First-Time Home Buyer Blunders

Buying a home can be an exciting yet nerve-wracking experience. After all, purchasing a home can cost hundreds of thousands of dollars, so a lot can be at risk if you make a common first-time home buyer mistake. In this article, we’ll provide home buying tips so you can prevent issues that can be costly or make it more challenging to find the home you love. Keep reading below to find our list of common mistakes when buying a home and how to avoid them.

As stated, buying a home is expensive. In fact, it will likely be the most expensive purchase in your lifetime. That’s why it’s crucial to start saving as early as possible.

A common home buyer mistake is failing to save enough money to cover a sizable down payment. Most conventional loans recommend a down payment of around 20%, which some home buyers may qualify for down payment programs or assistance that require a lower percentage of a down payment. Regardless, down payments can still be expensive. For example, if you’re purchasing a home for $400,000, a 20% down payment will be $80,000, while a 3.5% down payment will be $14,000. Both are large sums of money, which means you must save early to make this purchase possible.

Some tips for saving early include creating a budget where you set aside a portion of each paycheck toward buying a home. To make this easy, you can open a separate savings account where money is automatically transferred to the account each pay period. It’s also important to note that saving takes time, so you may need to take an extra year or two to reach your goal.

A common mistake when buying a home is purchasing one out of your budget. During the home buying process, it can be tempting to choose a larger home in a pricier neighborhood. However, this might mean it’s out of your price range. During the initial stage of the home buying process, set strict parameters so you only tour houses you can afford. This way, it can prevent you from forming an attachment to a home you might not be able to afford.

A key factor determining your mortgage’s amount and interest rate is your credit score. A credit score is a number that reflects a person’s creditworthiness, which is a prediction of how likely you are to pay back a loan.

For most buyers, financing a loan on a 15- or 30-year mortgage is usually the most appealing option. However, mortgage lenders want to ensure they’re lending money to borrowers they can trust. That’s where your credit score comes in. Typically, the higher the credit score, the more likely a mortgage lender will lend to you. Additionally, it can encourage lenders to give you a lower interest rate, saving you thousands of dollars over the course of your loan.

Some tips for working on your credit score include:

Another first-time buyer mistake is signing with the first mortgage lender you find. Similar to buying a car, it’s important to shop around and find a mortgage lender who offers a favorable quote. Each mortgage lender will have different fees and interest rates, so you should contact multiple lenders to compare these factors. Then, you can make an informed decision on which lender will save you the most money on interest and fees.

As a first-time home buyer, there are several programs you can take advantage of to save money on your first home. An important home buyer tip is contacting your local or state housing authority to inquire about first-time home buyer programs, such as:

These are some of the many first-time home buyer programs that municipalities and states may offer to help you purchase your first home.

When buying your first home, it’s important to know exactly what you want. After all, you’re going to spend most of your time in your home, so you want a space that’s worth the money you spend on it. With that said, create a list of non-negotiables, which are qualities in a home you must have. By having this list written out, you’ll be able to easily determine whether a home is right for you. Examples of non-negotiables some homeowners might have include:

With your list of must-haves, you’ll be able to narrow your search and find a home you love.

As mentioned, shopping for homes that might not be within your budget is a common trap. To prevent this, an important home buying tip is to get a pre-approval letter from your mortgage lender. A pre-approval letter will outline the amount of money a lender will provide under specific terms. Not only will a pre-approval letter make it easy to understand how much money you’re allowed to borrow to purchase a home, but it also shows you’re a serious buyer, making you more competitive in the real estate market. Visit our financing page for more information on pre-qualifications and the home loan financing process.

The home buying process can be long, especially during certain market conditions. That being said, it’s important to know when to be patient and when to act fast. For example, if there’s a period of inflation, interest rates might spike, meaning you’ll be paying more money over the course of the loan. However, it’s just as important to know when to act quickly. To be better informed on when to make an offer, be sure to work with a realtor who’s an expert on local market conditions and has a good understanding of what you’re looking for.

Now that you’ve read our first-time buyer mistakes and home buyer tips, learn how to bid on a home and browse our homes for sale at ServiceLink Auction. On our platform, you’ll find foreclosure homes, newly foreclosed, and bank-owned homes that might be the perfect fit for you.