Whether you’re a first-time buyer or an experienced homeowner, purchasing a new home is an exciting prospect. From saving money to negotiating your closing process, there is a lot to consider if you want to avoid the common mistakes of many first-time buyers. Overall, navigating the process from start to finish is much less stressful with a little professional assistance.

The most valuable piece of advice for any buyer is to find the right real estate agent. Your real estate agent will be your biggest ally and advocate through the entire process—and they’ll help you avoid the common mistakes listed below.

Not knowing how much you can afford

In a competitive market, timing is critical. When beginning your home search, knowing how much house you can afford is important to avoid wasting time.

If you go into your home search without a clear budget, you could end up wasting a significant amount of time touring homes that are out of your price range—or visiting homes below your actual price level.

Many first-time buyers will want to purchase a home and secure a loan with comfortable monthly payments. Your real estate agent will suggest steps to gain a clear sense of what you’d like to spend, including using a mortgage affordability calculator to learn what price range makes the most sense for you.

Getting a single rate quote

Like any major purchase, when shopping for a mortgage, you should make comparisons prior to committing. This is where first-time homebuyers can anticipate saving money. Mortgage interest rates vary, as do fees, including closing costs and discount points.

According to the Consumer Financial Protection Bureau, nearly half of all borrowers don’t shop for a loan. This common misstep is easily avoidable. As such, you should apply with multiple mortgage lenders to test your options. It’s also important to note that all mortgage applications made within a 45-day window typically count as one credit inquiry.

Not checking credit reports


Many first-time home buyers overlook how closely mortgage lenders will scrutinize credit reports to determine a loan amount and interest rate. When a credit report has errors, it’s likely you’re quoted an interest rate higher than you’re entitled to based on your credit standing.

Ensuring your credit report is accurate and free of errors is the best way to protect your bottom line. Request a free credit report each year from each of the three most widely used credit bureaus, and develop a plan or strategy to dispute the errors you come across.

Making a small down payment

These days, it’s not necessary to make a 20% down payment toward the purchase of your new home. There are loan programs that allow you to buy a home with zero or 3.5% down. While many times buyers think this is a good idea, there are also instances where homeowners experience regret.

Many homeowners under the age of 35 believe they should’ve waited to purchase until they had a bigger down payment. The key to deciding the right amount to put toward your home’s down payment will reflect what you find comfortable and affordable for a monthly house payment.

Additionally, how much to save is a judgment call unique to a homeowner's needs. A larger down payment signals a smaller mortgage and the possibility of more affordable payments each month. The downside is not taking into account home prices rising and mortgage rates fluctuating amid a hot market.

What this means is it may prove difficult to purchase the home you want, and you may end up missing out on building home equity as home values continue to go up. Make sure your down payment yields a monthly payment you’re comfortable with.

Not knowing the costs of homeownership


Many first-time homeowners are taken by surprise when the bills associated with homeownership emerge. Overlooking that there are more costs to owning a home than simply paying a mortgage is a common misstep for inexperienced homebuyers.

Aside from your house payment, you’ll have costs associated with things like gas, water, and electricity needing to be paid on a month-to-month basis. While many of these bills are the same if you’ve previously rented, a new home frequently comes with higher or added costs, including homeowners association fees.

As you work with a real estate agent to plan your home purchase, they’ll be able to offer important information, including your neighborhood’s property tax rate and the cost of insurance. You may also request to see the seller’s utility bills for the previous year it was occupied to gain a sense of how much you can expect to pay once you move in.

Applying for credit before finalizing a sale

There’s a period between applying for a mortgage and receiving the keys to your new home which is critical in the home buying process. During this time, you’ll want to leave your credit alone and not make the mistake of applying for a new credit card or making a large-scale purchase that will impact your credit score.

Wait until the period after closing to open any new accounts or to purchase big-ticket items on your credit cards. The lender’s mortgage decision is made by analyzing your credit score and debt-to-income ratio (or the percentage of your income applied to monthly debt payments).

When you apply for credit, your credit score is reduced by several points. A new loan will signal an increase in your debt-to-income ratio and potentially have a negative impact on the way a mortgage lender sees your application and can affect the interest rate or fees on your mortgage.

The simplest way to avoid this is by not opening new lines of credit or charging items such as furniture, appliances, or any major purchases to your credit cards. Instead, pick those things out ahead of time and purchase them on credit after you have your keys in hand and are ready to close on your home.

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If you’re interested in Cumming real estate, or in Lake Lanier homes for sale, contact RE/MAX TRU today.