Because it difficult navigating the real estate market, it’s only natural that some people are going to make mistakes. With that in mind, Forbes asked industry professionals to share their experiences with the biggest 5 mistakes buyers make. Here, are some tips to avoid making one of these common pitfalls.
1. Not meeting with a lender early
One of the most common mistakes first-time homebuyers make is not meeting with a local lender right away. A lot of people worry about wasting a lender’s time, especially if they aren’t ready to buy immediately. The earlier you consult with a lender, the better. Sometimes it takes a long time for people to qualify for a loan. Lenders are almost like free financial advisors and can help buyers develop a plan to reach their goals.
2. Relying too much on the advice of family and friends
One of the biggest mistakes buyers make is listening to their family and friends about their real estate experiences. Buyers should understand that every transaction is different. When well-meaning family and friends give advice, they do it with the best intentions, but rarely do you get the details of their finances or their circumstances. Real estate is personal and regional. What works in one state doesn’t necessarily work in another state, and what a homeowner experienced three years ago may not be relevant to current market conditions. Seeking advice from family and friends rather than industry professionals who know their unique circumstances could prove frustrating and disappointing.
3. Waiting for the “perfect” home to appear
In today’s competitive market, no buyer will be able to find everything they want in a home. So, they need to be clear on which features they may want but are ultimately able to live without. If not, while they are looking for the perfect home, the property they may have been able to make into their ideal home will be gone. While they may not like the kitchen or bathrooms to start, it’s much smarter to consider whether they could move in, live with them for a while and upgrade later.
4. Biting off more than you can chew, financially
The mortgage will not be your only cost when buying a home. Make sure you have the monthly budget to cover regular, as well as unexpected, maintenance items. For example, will the house need a new roof, water heater, HVAC, windows or exterior siding in the next three to five years? In addition, there also are property taxes and HOA fees to consider. Buyers should account for all of these costs upfront.
5. Going on a shopping spree after applying for a mortgage
Once their offer has been accepted, some buyers immediately go furniture shopping or book a vacation. That’s a mistake because it hurts their chances of getting a mortgage. Going on a shopping spree will create a new debt-to-income ratio if those purchases are financed, potentially causing a mortgage application to be denied. Even if the buyer does not finance these purchases and pays cash, it still will diminish their cash reserves, which the underwriter for the bank or lender may look upon negatively. The lesson: It’s crucial to keep your finances as steady as possible during the underwriting process.