7 First-Time Home Buyer Mistakes That Cost Thousands
Most first-time buyers make at least 3 of these mistakes. Here is how to avoid all 7.
Buying your first home is exciting and terrifying. The excitement leads to emotional decisions that cost real money. These are the seven most expensive mistakes first-time buyers make.
1. Not Getting Pre-Approved First
Pre-qualification is a guess. Pre-approval is a commitment from a lender based on your actual finances. Without pre-approval, you waste time looking at homes you cannot afford, and sellers do not take your offers seriously.
2. Maxing Out Your Budget
The bank will approve you for more than you should spend. Just because you qualify for a $400,000 mortgage does not mean you should take one. Aim for 20-25% of gross income on housing, not the 28% maximum.
3. Skipping the Home Inspection
A $400-600 inspection can uncover $10,000-50,000 in hidden problems. Waiving inspection to win a bidding war is the most expensive gamble in real estate. Foundation issues, roof problems, and electrical hazards are invisible to untrained eyes.
4. Forgetting About Closing Costs
Closing costs are 2-5% of the purchase price. On a $300,000 home, that is $6,000-15,000 due at closing ON TOP of your down payment. Budget for this from the start.