Whenever friends, family, or acquaintances buy their first homes, everyone tends to congratulate them. Hopefully, they have the property of their dreams because they’ve worked hard with a real estate agent. Do they brag about the deal they got and the great features of their new neighborhood?

It’s a great thing that these buyers are so happy to begin home ownership. But, it could be that the purchaser has been setting themselves up for an unnecessary painful financial future in exchange for short-term enjoyment of the real estate. Do they truly understand the incredible, long-lasting financial consequences of their decision? Are they able to even considered how devastating their choice may be in future years? In contrast to popular belief, buying your first home could be a huge mistake financially.

However, it’s understandable to make mistakes, especially when buying a home for the first time. You are out there, going into a new venture with bright eyes for the future, and seem to be ready for anything that comes your way. Although, some things that come your way could have been avoided if you take the time to truly assess what kind of home you’re capable of owning.

You can’t really afford are just two ways that first-time homebuyers put their future selves and finances at risk, whenever they are rushing into or insisting on buying properties. These are some common home buying mistakes to avoid.

1. Having high debt

It is much harder to get a loan or a good rate on your mortgage when you have a lot of debt, —especially in comparison to your income. Applying for a loan may help you in the short term, but your finances will continue to struggle long term. Your credit score is greatly affected by high debts, which will make it that much harder to buy a home in the first place.

Calculate your debt-to-income ratio, before starting the home search. A lot of lenders will restrict borrowers to a 43% ratio. Got more debt than that? You’ll need to pay it down first.

2. Buying a property you can’t afford

Buying less than what you can afford is actually the right way to go. Tons of expenses might be there which you haven’t accounted for. Plus, you probably don’t need all that space you thought you did.

3. Prioritizing style over the structure

Come to think about why the style is so important to you. Are you trying to prove something to yourself or are you trying to impress someone? To feel comfortable in their own home, style is important for someone to consider, but the structure is much more important. Style can be created after the home is bought, however, the structure is much more complicated to work on after the fact.

4. Diving into the home search too soon

Browsing homes is so much fun, but it shouldn’t take precedence over saving. Depending on the location where you live, the costs of owning a home with closing costs, down payments, and taxes can be really expensive. Saving for the home and putting a good amount of money down is very helpful and can help avoid higher interest rates in the future.

5. Forgetting to account for closing costs and other expenses

Location-dependent, closing costs, and other expenses could be a lot more money than you were expecting to pay. Owning a home is so much more than a down payment. There will be property taxes, HOA fees, homeowners insurance, repair costs, and more. Considering all of the fees and costs for the area you’re looking to buy a home in before you settle on anything, is huge Yes.

6. Skipping mortgage pre-approval

Although you don’t necessarily need a mortgage pre-approval, it is a good thing to have. This helps sellers at ease if your credit isn’t so great, whenever you’re trying to move to a popular area, or you don’t know how much you can afford. Among these circumstances, a pre-approval is like a checkmark next to your name to show a seller that you’re safer to work with than other buyers.

7. Not shopping for mortgages

A mortgage is never the same. Looking around will help you find the best deal for you and your housing needs. Think of it as buying a car where everything can be negotiable and you have to work in your best interest too. Jane Floyd, our trusted lender can help you with your questions too.

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