There are many first time home buyers mistakes to avoid with a bit of preparation and know-how. In today’s ever-changing and competitive housing market, it has never been more important for first time home buyers to carefully approach their new real estate journey.

Purchasing a home is always exciting, but doing so for the first time can be especially thrilling. Many first time homebuyers view their purchase as the realization of a long-held dream.

But first time home buyer errors are frequent, and while many of them are minor missteps, some may be disastrous and cause unneeded delays in the buying process as well as future financial problems.

First Time Home Buyers Mistakes To Avoid

Here are five first time home buyers mistakes to avoid – easily…

Skipping Preapproval (One of the worst first time home buyers mistakes to avoid)

Home buyers benefit from preapproval in a number of ways. The quickest and most accurate approach to figure out what you can afford is to first get preapproved.

Even though you may assume you understand all the expenses related to home ownership, now is not the time to take a chance on a mistake.

You can avoid setting your goals too high or taking on more than you can handle by getting preapproved through a mortgage company. This gives you a reliable pricing range to stay in while you search. Additionally, having preapproval gives you a more serious appearance to sellers, which is advantageous in circumstances like bidding wars.

Big Changes To Accounts

One of the many first time home buyers mistakes to avoid that can cause a multitude of issues is any significant changes to your banking statements. These changes can include any of the following:

  • Depositing large sums of money – lenders need a clear and traceable trail for all of your finances, and large amounts of cash can make that difficult.
  • Large purchases – any new debt you acquire changes your debt-to-income ratio, which is what lenders use to determine your risk.
  • Switching bank accounts – this is another action that makes it difficult for lenders to track your finances.

While applying for a mortgage or preapproval, the most important thing to do is maintain your current finances. This makes the process much easier while ensuring your lender can easily take your financial situation into account while determining an adequate loan amount for your home purchase.

first time home buyers mistakes to avoid

Making Changes To Your Credit

Another financial misstep that can create challenges while buying your first home is any changes to your credit. Keep in mind that your credit accounts are much different from your personal banking accounts. Lenders take many unique aspects of your credit into consideration while determining your loan amount.

While going through the process, you shouldn’t apply for any new lines of credit. This includes everything from credit cards to car loans. These actions can have a negative impact on your credit score, which will affect both your loan amount and your potential interest rate.

You also don’t want to close any existing accounts. It is common for new buyers to assume that less available credit decreases risk and increases their chances of approval. However, this affects your credit usage and credit history – another important factor taken into consideration by mortgage companies.

Failing To Educate Yourself On Loan Programs

Many lending options for first time home buyers can help reduce the cost of home ownership, lower loan payments, and provide financing for repairs. These programs include:

  • FHA loans
  • VA loans
  • USDA loans
  • Fannie Mae and Freddie Mac Loans
  • State first time buyer programs
  • Home renovation loans

Each of these includes its own set of criteria intended to offer assistance and more favorable lending options to those who are currently in the market to buy their first home.

Understanding the standards of these loans and whether any apply to your current financial situation can help you save money and make it easier to purchase a home.

Getting Ahead Of The Process

For many, there is nothing more exciting than purchasing their first home. Sure, the process is challenging and can even feel impossible at times. But you’ve likely already dreamed about how you’d like your home to look, where you’d like it to be located, and how you plan on making it your own.

There is nothing wrong with a little forward thinking. However, looking for homes before talking with a mortgage expert is never recommended. You may look at homes outside of your price range without even realizing it. After all, each and every mortgage and preapproval application is highly personalized – making it difficult to predict the loan amount for which you will be approved.

First Time Home Buyers Mistakes To Avoid This Year

Understanding first time home buyers mistakes to avoid requires a great deal of time, energy, and effort.

Thankfully, there is a much easier way to ensure you don’t trip before taking the first step. Contacting a real estate professional in your area helps to ensure your success during the process of purchasing your first home.