You really, really don’t want to make mistakes when you buy your first house. It could be a costly error — even more costly than the time you dropped $10,000 on rare Beanie Babies in the ’90s. Unfortunately, mistakes seem to be part of the home-buying process. To find out some of the more common screw-ups first-time homebuyers make, we spoke to Sandra O’Connor, a Realtor for 29 years and the regional VP of the National Association of Realtors. Turns out, most of them are avoidable if you know what you’re doing.
Making huge purchases right before you close on the home
Before you go buy that new electric BMW just because Katie Couric and Bryant Gumbel told you to in a commercial, you might want to hold off until you close on your new house. O’Connor says lenders will re-check your debt load right before closing, and if you have a big ol’ car payment on the books, they might rethink your ability to pay off the home loan. She’s seen lenders back out at the last second. This also goes for big furniture or appliance purchases, too. Might wanna keep that Sears card in your wallet until you move in.
Not getting your finances in shape
If you assume you’ll have enough money to buy a home because you have the down payment in hand, guess again. First of all, checking your credit score is key — it can determine the interest rate and insurance costs related to your new home. And there are plenty of pre-buying expenses you might not realize you need to pay for as well. “The more you can invest up front, the easier the loan process will be,” O’Connor says. “But throughout that process, in addition to applying for the loan, you also have to do things like get insurance for your homeowners policy in place. You need to have inspections. The lending institution will probably charge them a fee to have an appraisal, as well.”
Underestimating the ease of home improvements
If you buy a fixer-upper, there are going to be myriad costs and time spent on getting the place in shape. But even if you buy a home that needs a few updates — refinishing hardwood floors or remodeling a bathroom — O’Connor cautions that “the projects will always take longer and cost more than you think.” Unless you buy a house that’s on an episode of Property Brothers, and then the whole job will only take about 45 minutes.
Not working with a trusted adviser
It might seem a little conflict-of-interest-y that a real-estate agent would recommend you work with a realtor when buying your first house instead of going it alone… but that advice also has the benefit of being a good idea. “If you have a professional helping coordinate everything, then the [home-buying] process will be smoother,” O’Connor says. “And they’ll also be alert to what might be coming up along the way. There are ways, if you have an agent representing you, that they can negotiate with the seller to pay your closing costs.” And it’s not just your agent that can help — if they work from an office, “they bring to the deal a whole team to support the process and guide you right.” Just because you read one news article on Trulia about how to buy a house, that doesn’t make you equal to an agent’s years of experience in buying and selling real estate.