Mistakes First-Time Homebuyers Make 

First-time homeowners are bound to run into issues they didn't expect, but that doesn't mean they're unavoidable. We've put together seven common mistakes that first-time buyers make, and how to avoid them.

Diving Into the Market without an Agent

The biggest mistake first-time homebuyers make is thinking they don’t need a Realtor from the start. Many first-timers are under the false impression that they have to pay a commission to a buyer’s agent, but it’s the seller who pays a commission, not the buyer. Find an experienced agent you trust and ask him or her to be present from the very beginning. Simply attending open houses and calling the number on the sign out front could put a first-time buyer at a disadvantage. Find a Realtor to designate as your agent and call that person to have him/her schedule your showings and be present with you every step of the way.

Not Researching the Market

The second biggest mistake buyers make is not knowing their market. Working with a buyer’s agent will help to alleviate this one, so work with someone who practices real estate full-time. An experienced Realtor can guide you on whether the current economy presents a buyer’s market, seller’s market, or something in-between. Some buyers simply don’t have the time or financial experience to truly research their local real estate market. In this case, it’s imperative to work with a buyer’s agent from day one.

Not Knowing if They’re Bankable

A third mistake, and one that can really hurt, is shopping before getting pre-approved. Pre-approval is the essential first step to obtaining a mortgage. Buyers who begin seeing homes without knowing what they can afford and/or what their monthly expenses will be risk shopping outside of their means. Worse, buyers might begin looking at homes and preparing to move, only to discover that they do not currently qualify for a mortgage. Avoid putting yourself and your family in this uncomfortable situation by getting pre-qualified before you see homes. Visit www.ruoff.com to get a head start.

Believing Everything They Read Online

Not all websites are created equal, and some churn out total junk. All the standard advice applies here: If something sounds too good to be true, then it probably is, don’t share personal information with an unknown party, and use your time wisely. Pre-shopping for a home online is fun, and there are lots of great photos out there, but make sure you’ve got mistake #3 under control before you spend time looking at homes. Also, don’t rely on an online “mortgage calculator” to determine whether you can afford the home you like. Legitimate pre-approval is essential to know whether you can make an offer and what your exact payment would be.

Making A Big Purchase After Getting Pre-Approved

               If you buy a car in the weeks or days before closing on your new home, your lender will find out and will have no choice but to resubmit your loan for underwriting. At the least, this could delay your closing. Worst case scenario is that your new payment will drive your expenses up to a point where you are no longer eligible for a home loan. This applies to anything with a monthly payment and anything that might show up on your credit report.

Overestimating the Home’s Value

For first-time homebuyers, it can be tempting to overbuy with the hope that the home will drastically appreciate over the next few years, resulting in quick profit. This rarely happens and is not a financially sound decision. On the other hand, rehabilitation loan programs do exist to help buyers improve on neglected homes. Typically, these programs are offered to owner-occupants. (Investors usually present their own capital and/or sweat equity when they “flip” a house.) Feel free to inquire about rehab loans if you think this scenario could be a good fit for you.

Withholding Information from their Loan Officer

Your L.O. is on your side. Disclose any financial blunders upfront so that he or she can help you to overcome credit issues and get the best loan possible. Some buyers are reluctant to mention past credit issues, but chances are those issues are going to surface. Better to navigate the hurdles early than risk having your deal fall apart in the days before closing.

By the way, if you’re shopping for your first home – Congratulations! Real estate is essential to a diversified portfolio and a solid net worth. Plus, you get all the peace and emotional benefits that come with owning versus renting. Homeownership is a beautiful thing.