Top 5 Mistakes First-Time Homebuyers Make and How to Avoid Them

Buying your first home can be an exciting and nerve-wracking experience, all rolled into one, right? You're probably imagining yourself in that perfect home, but what if I told you that there are some common mistakes that could turn your dream home into a financial nightmare?

Hey everyone, I'm Curtis Chism with EXP Realty here in Boise, Idaho, and today, I'm breaking down the top five mistakes that first-time home buyers make, and more importantly, how you can avoid them. After working with countless first-time buyers here in the Treasure Valley area, I've seen these pitfalls come up time and time again. But don't worry, by the end of this video you'll know exactly what to watch out for and how to make your home buying process smoother and more successful.

So let's dive in. One of the biggest mistakes first-time home buyers make is not getting pre-approved for a mortgage before they start looking at homes. I get it, house hunting is super exciting, but here's the deal: without a pre-approval, you're flying blind when it comes to knowing what you can actually afford.

Now, being pre-approved gives you two major advantages. First, it sets clear expectations on your budget, so you don't waste time looking at homes that are out of reach. Second, it makes your offer stronger when you're ready to make a bid. Sellers are more likely to take you seriously when they know that a lender has already vetted you.

Now, getting pre-approved is really simple. You'll need to provide your lender with financial documents like bank statements and tax returns and proof of income. But also, pull your credit to see where you stand. But don't worry, that won't significantly impact your credit score as long as you're not applying for a whole bunch of loans over an extended period of time.

Mistake number two: overlooking the hidden costs of owning a home. This is a big one that catches a lot of first-time home buyers by surprise. When you're budgeting for a home, you're probably thinking about mainly your down payment and your monthly mortgage payment. But what about all those ongoing costs that come with owning a home?

Let's break it down. So you've got property taxes, homeowners insurance, and maintenance costs like repairing a roof, replacing a water heater, and don't forget about utilities. All of these add up over time. But here's something you might not realize: these hidden costs don't just pop up after you own the home. Many of them are part of your closing costs, which means you need to be ready before you even get the keys.

Now, what are those closing costs? Closing costs typically include things like loan origination fees, appraisal fees, title insurance, prepaid property taxes, and homeowners insurance, and potentially some escrow fees. In Idaho, closing costs usually range around 1 to 2% of the home's purchase price. So if you're buying a $400,000 home, that could mean $4,000 to $8,000.

Now, they can be higher, especially if you're using funds to buy down the mortgage rate, which is certainly an option to help lower your monthly payment. But here's the good news: if the home that you're buying doesn't have a lot of competition on it, then we can often negotiate something called a seller credit. This is where a seller covers those closing costs for you. This can help you avoid paying those costs out of pocket and essentially finance them into the loan.

Now, the third mistake is skipping the home inspection. Now, this one is really crucial because your home is one of the biggest investments that you'll ever make. The last thing you want to do is move in and find out there's thousands of dollars in repairs waiting for you.

Now, a good home inspection can uncover issues like roof damage, plumbing leaks, electrical problems, or even foundation cracks. These are the kinds of issues that can become massive headaches and financial drains. If you don't catch them before closing, you might be tempted to waive the inspection, especially if you think it will make your offer more attractive. But trust me, this is not where you want to cut corners; always hire a licensed home inspector. And if any red flags come up, you can either ask the seller to fix them, negotiate the price down, or get credits to account for the repairs.

Number four on our list is not fully understanding your mortgage options. First-time buyers often think it's as simple as finding the lowest interest rate, but there's really a lot more to it than that. For example, you might be choosing between a fixed-rate mortgage, which locks in your interest rate for the entire loan, or an adjustable-rate mortgage, which starts lower but can get higher over time.

Then there are different loan types like FHA, which might require a smaller down payment but come with mortgage insurance versus conventional loans that might require a higher credit score or down payment. The right loan for you depends on your financial situation and long-term goals. So make sure that you're working with a lender who explains the options clearly and isn't just pushing one type of loan.

And finally, mistake number five is letting your emotions drive your decision. Look, buying a home is a huge milestone. It's easy to get emotionally attached to that perfect house. But when emotions take over, it can lead to costly mistakes. You might find yourself stretching your budget, ignoring problems that came up in the inspection, or getting into a bidding war that pushes the price way over your comfort zone.

I always tell my clients to stick to their budget and don't compromise on major issues. Remember, there's always another house out there, and it's better to be patient than end up with a home that doesn't really fit your needs or your finances.

So there you have it: those are the top five mistakes first-time home buyers make and how to avoid them. Like buying a home can feel overwhelming, but with the right preparation, you can dodge these pitfalls and make the process much smoother. If you're in the market for a home in Boise or anywhere in the Treasure Valley, I'd love to help guide you through the process and make sure that you avoid these common mistakes.

Reach out to me today. Let's make your dream of home ownership a reality.