Reaching the milestone of purchasing your first home can be a very happy event. But the buying process can also be quite frustrating and confusing if you go into it not knowing what to expect. Being prepared is essential for a first time home buyer. If you're going to be purchasing your first home soon, avoid the following mistakes:
Not Getting Pre-Approved for a Mortgage
Most people need a mortgage loan in order to purchase their first home, and it is important to get pre-approved before you begin looking at homes. When you're pre-approved for a mortgage you will know how much a financial institution is willing to lend you, and you will be able to act quickly when you find a house that you love.
Don't confuse being pre-qualified for a mortgage with being pre-approved; when you're pre-approved for a loan all of your information goes through underwriting and you receive a formal loan offer, while being pre-qualified just means that you have been selected as a good candidate for a loan, but there are no guarantees that you'll be approved for funding.
Failing to Create a Budget
Just because a financial institution is willing to lend you a certain amount, it doesn't mean that you should buy a home at the very top of the amount you were approved for. Before looking at homes, it is a good idea to create a detailed budget to help you determine exactly how much you are comfortable paying each month when it is time to send in a mortgage payment. Don't forget to consider expenses that may not have been brought up during loan underwriting, such as funding retirement accounts, saving for a family vacation, putting aside money for an emergency fund, and discretionary spending, such as going out to dinner or buying gifts for birthdays and holidays.
Selecting the Wrong Real Estate Agent
An experienced real estate agent is one of the most valuable resources that a first time home buyer can have. Don't be hasty when selecting a real estate agent to work with—it is I your best interest to take your time and interview several agents. If possible, try to find an agent who acts as a buyer's agent and specializes in helping first time buyers purchase a home.
Unwilling to Compromise
Most first time buyers do not find a house within their budget that has every feature and amenity that they want. If you want to buying process to go smoother, make sure you are willing to compromise during your home search. It can be very helpful to give your agent a list of things that you absolutely must have in a home so he or she can do the best to find a house that will suit your needs.