Buying your first house can be so exciting! It can also be an overwhelming experience because there is so much you have to learn about financing, the house-hunting process, and hiring a real estate agent. Surely, you will make some mistakes along the way, and that's okay — you will learn from them. However, there are a couple of big, common mistakes that you want to avoid rather than make yourself.
Spending Too Much
When you go to the bank to get pre-approved for a mortgage, they will tell you how much they are willing to lend you. In almost all cases, you should not spend this much. Doing so will leave you over your head in debt and with a house payment that takes up way too much of your budget. A smart guideline to follow is to never buy a home that costs more than twice your annual salary — regardless of what the bank will lend you. So if you only make $50,000 a year, you can comfortably afford a $100,000 single-family home.
Hiring an Inexperienced Real Estate Agent
You're young and just building your career, so you want to hire a real estate agent who is doing the same, right? This strategy sounds nice, but it often backfires. You don't have a lot of real estate knowledge yourself, so what you really need is a truly experienced realtor with a ton of knowledge to guide you through the process. Look for someone who works with a lot of first-time buyers because they'll be better at answering your questions and helping you avoid common pitfalls.
Settling Too Soon
Don't be so excited to get into a home that you buy the first one you look at that marginally meets your needs. Make a list of your must-haves in a home, and don't settle for a home that does not have those features. You'll be in this home for a while, so if it has one less bedroom than you need or is too far from your workplace, that will grow to be a major annoyance over time.
Emptying Your Savings Account
Don't put everything in your savings account towards the down payment. You need money left in an emergency fund in case you need to make any last-minute repairs to your new home! If you take out an FHA loan, which is really common with first-time buyers, you do not need to put the traditional 20% down — and it's often a good idea to put less down so you have more liquid cash available for emergencies.
To learn more about other common pitfalls for first-time buyers, talk with your real estate agent.
