Purchasing your first home entails a slew of major decisions, and it can be as nerve-wracking as it is exhilarating. It’s easy to get caught up in the excitement of home hunting and make mistakes that could lead to buyer’s remorse down the road.

If you’re a first-time homebuyer or it’s been a long time since you last bought a house, information is power. It’s crucial to know what to expect and what questions to ask, in addition to knowing where the risks are.


Mistakes made by first-time homebuyers

Here are 14 frequent mistakes made by first-time homebuyers and how to avoid them:

  • Before applying for a mortgage, you should look for a home.
  • Only spoke with one lender
  • Purchasing a home that is more expensive than you can afford
  • Moving too fast
  • Using up your savings
  • Using credit carelessly
  • Fixated on the property rather than the surroundings
  • Emotion-driven decision-making
  • Assume you’ll need a 20% down payment.
  • I’m keeping my fingers crossed for the ‘unicorn.’
  • Acquire Fire Insurance or Home Insurance
  • The hidden costs of homeownership are often underestimated.
  • Not putting money aside as a gift
  • Negotiating a homebuyer refund is not an option.


Top Mistakes Made


Before applying for a mortgage, you should look for a home

Many first-time buyers begin their search for a home before meeting with a mortgage lender. Housing inventory is scarce in today’s market since there is significantly more buyer demand than affordable homes available.

You’ll find it nearly impossible to get your offer considered seriously in such a competitive market unless you have a mortgage pre-approval (or cash in hand). That’s because sellers won’t want to take a chance on someone who isn’t even sure they’ll be able to secure a loan, especially if they have many other offers on the table.

How this affects you: If a property you adore goes on the market, you may find yourself behind the eight ball. You might also look at houses that you can’t afford.


Only spoke with one lender

First-time buyers frequently make the mistake of getting a mortgage from the first (and only) lender or bank they speak with, which is a huge error. You could be leaving thousands of pesos on the table if you don’t compare offers.

How this affects you: The more you browse around, the more you’ll have a better basis for comparison to ensure you’re getting the best offer and lowest prices.


Purchasing a home that is more expensive than you can afford

It’s easy to fall in love with homes that are a little out of your price range, but going overboard is never a good idea. With housing prices on the rise, it’s more crucial than ever to stay within your budget.

What this means for you: Buying a property that you can’t afford puts you at a larger risk of foreclosure if you run into financial difficulties. Other bills and costs will take up less space in your monthly budget.

It can also crowd out other options, such as putting money into a retirement account, a child’s education fund, or vacation funds.


Moving too fast

Buying a home may be a complicated process, especially when it comes to the mortgage procedure. The most common mistake we find is not planning ahead of time for their purchase.

What this implies for you: Rushing the procedure may leave you unable to save enough money for a down payment and closing charges. Speeding to the finish line can also hinder you from fixing issues on your credit record that restrict you from obtaining better loan terms.


Using up your savings

One of the most common first-time homebuyer blunders is devoting all or most of your finances to the down payment and closing costs.

“Some people scrape together all of their funds to make the 20% down payment so they won’t have to pay mortgage insurance, but they’ve chosen the wrong poison since they’ll end up with no savings at all.”

How this affects you: When acquiring a traditional mortgage, homebuyers who put down 20% or more don’t have to pay private mortgage insurance (PMI). This normally amounts to significant monthly mortgage payment reductions, but the risk of living on the edge isn’t worth it.


Using credit carelessly

A mortgage lender will pull your credit record during pre-approval and again right before closing to ensure everything is in order. Your lender wants to make sure your financial profile hasn’t changed.

What this means for you: Any new loans or credit card accounts on your credit report could endanger the loan’s ultimate approval. This is a lesson that many buyers, especially first-timers, have to learn the hard way.


Fixated on the property rather than the surroundings

Sure, you want a home that fulfills your necessities and fulfills your wish list. According to Alison Bernstein, president, and CEO of Suburban Jungle, a real estate strategy consultancy, being choosy about a home’s appearances might be short-sighted if you end yourself in a community you despise.

“Choosing the ideal town for your life and family growth is crucial,” Bernstein explains. “The idea is to find you and your family a spot where the [area’s] culture and beliefs are compatible with your own.” You may always upgrade or downgrade your property, add a third bathroom, or reconstruct your basement.”

What this means for you: You can fall in love with your house but despise your area.


Emotion-driven decision-making

Purchasing a home is a significant life event. It’s a home where you’ll make memories, carve out personal space, and plant roots. It’s easy to become overly attached and make emotional decisions, but keep in mind that you’re making one of the most significant financial expenditures of your life.

“Because it is taking them longer than usual to find homes in this strong seller’s market, many first-time buyers are bidding over what they are comfortable with.”

How this affects you: Emotional decisions may lead to overpaying for a home and going over your budget.


Final Thoughts

If you can’t afford to buy a property without a cosigner, deferring your purchase is a good idea. “This protects your financial future and puts you in the best position to buy a home.”

You can also work to improve your credit score so that when the time comes to buy a home, you’ll be able to get the lowest rates without the need for a cosigner.


Read also: Traditions in Building your Home