Help Your First-Time Home buyers To Avoid These Common Mistakes
Help Your First-Time Home buyers To Avoid These Common Mistakes

Help Your First-Time Home buyers To Avoid These Common Mistakes

Buying a home for the first time can be both thrilling and scary. There are so many steps to buying a home and so many things for your clients to consider, but with the proper guidance, you can help them avoid many common mistakes first-time home buyers make.

Help Your First-Time Homebuyers Avoid These Common MistakesFirst-Time Home Buyer Mistakes to Avoid

  • Not getting pre-approved – Your clients may be tempted to jump into the home-buying process before getting preapproved by a lender, but they need to get pre-approved before starting their search. First, they need to know how much house they can afford. Second, they will appear more serious to sellers, especially if they end up in a bidding war. The seller may not even want to take a risk on someone who’s not sure they can get a mortgage. Finally, they’ll be able to lock in their rate and not be surprised with a higher interest rate once the sale goes through.
  • Not getting multiple rate quotes – Not getting multiple rate quotes could cost your client thousands of dollars. One lender may be able to offer them a better deal that could save them money over the lifetime of the loan.
  • Buying more house than they can afford – It’s best if your clients do not use the maximum loan amount offered to them. Even though lenders will consider their debt-to-income (DTI) ratio, this doesn’t consider other monthly expenses like groceries, health insurance and other bills.
  • Spending all of their savings – There are often hidden costs associated with home ownership. If your clients deplete all of their savings on the down payment, they could find themselves in a financial bind. It’s best if they take a little extra time to save up for all the upcoming expenses like closing costs and moving costs.
  • Not saving up enough money – If your clients have been renting, they may not realize all the costs associated with owning a home. In addition to the funds needed for a down payment, there are other costs associated with buying and owning a home that they need to consider, like closing costs, homeowners’ insurance, property taxes and moving expenses, to name a few.
  • Assuming you need to pay 20% down – Many of your clients may believe that they need to put 20% down on a new home, but the reality is that the average down payment is about 6% for first-time home buyers. Most people just can’t put down 20% on a home. Of course, they will have to pay private mortgage insurance (PMI) until they reach 20% home equity, but that may be more doable than a sizeable down payment.
  • Not taking advantage of first-time home buyer programs – There are several options for making the dream of owning their first home a reality for your clients. Don’t let them miss out on these opportunities. There are federal and state programs and programs sponsored by individual organizations and companies.
  • Making emotional decisions – Since buying a home is probably the most significant financial decision your clients will ever make, it’s important to steer them away from making emotional decisions. Buying a home for the first time is exciting, and it’s easy to get attached to a home you maybe cannot afford.
  • Rushing to make an offer – It’s a good practice to remind your clients that once they make an offer on a home, they are pretty much committed to buying if the seller accepts, so it’s best they do not rush to make a decision.
  • Waiting too long to make an offer – Just as jumping in too quickly could commit you to the wrong home down the road, waiting around for the “perfect” home could cost your clients a home where they can be happy.
  • Not researching the neighborhood – It’s easy to get so enamored with a particular home that you forget to explore the community. Encourage your clients to consider the schools, the crime rate and nearby amenities.

Help Your First-Time Homebuyers Avoid These Common MistakesDo you need more guidance on how to help your first-time home buyers avoid making mistakes? We’d love to help! Reach out to us at 571-234-5589 or by email at [email protected]. For videos on lead generation, Facebook tips, handy realtor tools and more, be sure to check out our YouTube channel.