12 mistakes to avoid when you buy your first home!

Buying a home for the first time can be very exciting.  Unfortunately, it is also easy to make a mistake because you’re not used to the process.  Here are 12 common mistakes that many first time home buyers encounter.

Hopefully, the review of these will help you avoid problems if you’re buying a home for the first time.  If you’re a repeat buyer, they will also be helpful to remind you of some of the pitfalls to avoid.

First-time buyers focus on what the bank says they can afford:

Many times first-time homebuyers will learn that a particular loan qualification and they’ll focus on that number.  For instance, if they learn they can get a loan for $300,000 they will only look at homes for $300,000.  Basically, they think because they qualify for a particular price that they should use all of that loan amount when they buy a house.  It is smart to remember that you don’t have to use all the money.

Taking time to learn about all the expenses associated with the home, and then buying at your comfort level it is a smarter move.  It will help you avoid becoming “mortgage poor.”

They don’t realize that buyers will compete for good homes.

Try to stay below your buying ability when you’re searching for your home in the In Triangle.  Remember, our area is experiencing a seller’s market so if you’re looking to buy a house in Apex, Cary, Clayton, Durham, Fuquay-Varina, Garner, Holly Springs, Raleigh, or Willow Spring you may have some competition from other buyers.  If you are in a bidding war with other buyers it will help if you can increase your offer.

If you are searching a little below your ability you should be able to do this without hurting your ongoing budget.  Click here if you want to learn other techniques to win in a bidding war.

You will need to pay closing costs when you buy a home in Apex

First time buyers forget they have to pay closing costs to buy a home.

If you get a mortgage to pay for the home you can expect to pay some upfront bank related fees for origination, credit analysis, etc.  Appraisals, inspections, legal fees, and other expenses will also show up as closing costs.  It’s wise to talk to your Realtor and your lender so you can get a feel for what you should expect to pay, and when the fees will be due.

They don’t realize that there are ongoing expenses outside the loan payment.

All mortgage payments include principal and interest on the loan.  Many times other expenses such as taxes and insurance costs are included in the monthly mortgage payment.  We frequently talk to buyers who searched for homes online and then did an online review of the expenses for a particular home.  These buyers come to us and tell us that they qualify for a particular house price.  When we dig in though we realize that they are neglecting hundreds of dollars in additional expenses.  The online calculator didn’t take all the local factors into account.

Don’t rely on what the online mortgage calculators say you will be able to afford.  You need a lender to give you the real truth, and they can also give you an idea about the interest rate that you’ll pay too.  Remember, online mortgage calculations rarely factor in the insurance or the taxes, so don’t rely on online guesses for your budgeting plans.

Also, it’s important to remember that most of the communities in our area have homeowner association fees and your home will also come with utility fees for water, electric, gas, and cable.  Take all of these into account as they can be substantial.  You want to make sure your budget reflects reality before you make any decisions.

They pass on the home inspection:

Many first time buyers will try to contain expenses by passing on getting a home inspected.  This is especially common when they buy in a new home community.  Avoiding a home inspection is never a good idea.  A great home inspector will save you thousands and can alert you to problems that you’re not aware of.  Some of the inspection reports we’ve seen for new homes prove just how important it is to have someone look over things.  Paying a $500 fee to get the house properly inspected is well worth it.  It could say you thousands, and will give you peace of mind!

They use the Realtor that is selling the house:

First time homebuyers aren’t sure how real estate works and they don’t realize that the agent on the sign is actually working hard to get top dollar for the seller.  It’s always best to hire your own buyer’s agent to protect your interests.  When you are buying a house you need an expert who is working for you, and you alone.  Hire a Realtor that you trust and the process will be so much easier.  Click here to learn about the benefits of using a buyer’s agent.  

Hire an expert when you buy a home in the Triangle

They use a friend as a Realtor:

The old saying that “20 percent of the people do 80 percent of the work” holds up well in the real estate community.  Before you hire a friend or an uncle who just got his real estate license, try to take some time to figure out if they have enough knowledge to handle everything.  As a first-time homebuyer you need expertise, so don’t take risks by hiring people who are naive or inexperienced about the market unless they are backed up by another agent who is market savvy.  When you’re making big decisions it’s not wise to rely on experts with limited knowledge.

First-time buyers are frequently fooled by beauty:

Staging a home is common in our area, and it is a great marketing move for the sellers.  However, many times new homeowners will focus on the furniture and the decorative “feel of the house” instead of the actual house itself.  You can avoid this by taking time to visualize each room without furniture.  Try to think about how you will live there.  If you find yourself complimenting the furniture or the decor, you’ll know that you have been mesmerized by the beauty.  Be careful, you want to buy substance, not beauty.

First-time buyers frequently ignore the fixer-uppers.

An aesthetically “ugly” house with good bones is almost always a great investment as long as it is located in a nice neighborhood. Try not to be put off by ugly.  Remember, when it comes to houses, “ugly” can get fixed.  So what if it has shag carpet or pink and purple walls in all the bedrooms?  That’s an easy fix.  Even more substantial fixes can be handled by a contractor.  Just make sure you know what the issues are before you commit.

Think long term and consider homes that need some work and you’ll save yourself thousands of dollars off the purchase price. If you can do the work yourself then you’re really golden.

They shop in the “hot neighborhood.

If you want to live in the hottest neighborhood you will pay dearly for that cool factor.  You will pay a high price for the neighborhood that has the current cool factor since demand drives up costs. There is another alternative though.  Think about buying in the *next* hot neighborhood.   If you can buy in the next place to pop, you’ll buy at a lower price and can gain more equity over time.  The key is trying to determine what area is the next one to pop?

If you make a good call on figuring out where growth is expected, you’ll win, but be careful with this speculation.  Talk to your Realtor and others about how the market is moving and use that information to make good decisions about where the next “pop” will be.

Buy a home in close to the new 540

First time buyers are more likely to make “emotional” decisions.

Buying a home is a large financial purchase.  It’s a smart move, but you need to be clear that you’re making the decision based on logic as well as love.  If you are sure that the numbers work, that you’re buying a solid home and that it’s located in an area where you’re comfortable, then you should be fine.

When you are making home buying decisions use the old “pros and cons” list.  Another thing to do is to check how many things are troublesome.  Every house has something that’s a problem, if you are ignoring too many of these you’ll be miserable, so pay attention to what you don’t like as well as what you do like.  When you take the negatives into the equation it will help you make a logical decision.

Homebuyers frequently shop for others/appearances

Don’t look for a place that will impress your friends, buy a house that works for you. It’s better to have a small yard for your dog or a neighborhood pool that you’ll use every summer rather than a front porch that looks good on Instagram. You will appreciate that yard long and neighborhood pool long after all those Facebook or Instagram “likes” have faded.

If you are looking to buy a home for the first time, reach out to us, we can send you a buyer’s booklet that will be helpful.  It explains the process in detail.

Just send a note in this contact form and ask us for a copy of the booklet for your review.  In the meantime, feel free to call us at (919) 481-4914 if you have any questions about buying a home in the greater Triangle area.

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