Buying your first home can seem daunting, however we are here to guide you through the home buying process each step of the way. Here is a list of some of the common mistakes to avoid when buying a home.

Mistakes to avoid before buying a house:

Reaching out to a Realtor last minute: Even if you are several months or years away from buying a home, finding the right Realtor® early on can help set you up for success. Look for an agent who has done multiple transactions in the areas where you are searching. Your agent can educate you on the local market conditions, set you up on automated searches to alert you to homes in your target area, and help connect you with local lenders, insurance agents and other useful resources. Once you are ready to go, experienced agents can help you find off-market opportunities as well as aggressively follow new listings on the MLS.

Not knowing your credit score: To get the best interest rate, you’ll want to have the highest credit score possible. Paying off your credit card balance regularly, adding a spouse to a long-time credit card, and waiting for old credit check windows to expire can help boost your score. Conversely, making late payments, applying for other loans (like auto loans) or spending erratically can negatively affect how a lender views your credit.

Waiting to save for a 20% down payment: One of the biggest obstacles to buying your first home is saving for a down payment but you don’t need to put a full 20% down to qualify for a conventional loan. Having 10% down can be enough. However the size of your down payment will correlate to your overall price range and your monthly payment. If competing against multiple offers, a larger down payment can make your offer more attractive to a seller. 

Not connecting with local lenders: While it is important to shop around for interest rates, finding the right lender is more than finding the best rate. Like Realtors®, the best lenders have spent time getting to know the area, developed relationships with local agents, and stayed up to date on the local market conditions. Lenders also work with different appraisal management systems during escrow, so it is advantageous to work with a lending institution that is known for using local appraisers who are familiar with comparable sales.

Not being pre-approved: This step is crucial when getting ready to submit an offer. In the competitive landscape of California, many listing agents will require a pre-approval letter to be included with an offer. Some buyers' agents may also request it before you start looking at homes. This is stronger than a “pre-qualification” letter, which is more of an estimate of what you could afford and does not take into account your full financial picture. The strongest position to be in when you submit and offer is with underwritten pre-approval. This can strengthen your offer even more, though is not necessary in most cases. 

Not factoring in closing costs: Closing costs are additional fees and payments that are made at the close of escrow in addition to your down payment. Your lender will review estimates with you, but it helps to be aware of them beforehand. According to Cross Country Mortgage, depending on your circumstances, these can add up to 2%-5% of the total purchase price.

Common mistakes to avoid during your home search:

Searching aimlessly: Make a list of your ‘must-haves’ and ‘nice-to-haves’ and share these with your agent. As you search, you may have to compromise depending on market conditions and your budget. Homeownership is a journey and typically does not begin with your “dream house.” Create realistic goals that will allow you to take your first steps toward homeownership. If the perfect house does come along in your price range, then you’ll be in an even better position to jump on it.

Doing it alone: Surround yourself with people you trust. Actively searching for a home can be mentally and emotionally challenging, so it helps to have other people to lean on during the process. Create your own personal ‘board of directors.’ This could include a friend who recently bought a home, a contractor that’s willing to view homes with you, family members who are homeowners, a personal mentor, and other related service professionals such as a CPA or financial advisor.

Overloading your schedule: The market can move quickly. To be successful, it requires committing to the process. While your agent will do much of the heavy lifting, all the decisions are made and signed-off by the buyer. Be willing to go out on home tours with your agent to see all the available inventory. When submitting an offer, be prepared to respond to calls, emails and e-signature requests throughout the day so that you don’t delay the process.

During escrow:

Missing deadlines: During escrow, there are several important deadlines. The first is getting your earnest money deposit wired into the escrow account, which is usually done within 3 business days of acceptance. If you have contingencies, you will need to be in constant contact with your agent to determine when to release them. There will also be time sensitive document packages that will need to be signed along the way. Your agent, along with the transaction coordinator, lender and title company will drive the process, however, as a buyer, the ball is always in your court to complete tasks by the deadlines defined in the purchase contract.

Moving before closing: You are contractually allowed to access a property in escrow along with your Realto®r for a specified number of days outlined in the purchase contract. However even if vacant, you cannot start moving your property into the home until the transaction has closed. This may seem obvious, but it is a commonly asked request from buyers who are eager to move in or start doing renovations. If you are scheduling movers, it’s advisable to give yourself a few days of pad between the closing date and your move in date in case there are any last-minute delays.

Making big financial changes: Once your offer is accepted, you are obligated to close the transaction unless you have a contingency that allows you to back out in good faith. Making major financial changes while in escrow can jeopardize your ability to secure a loan and close the deal. Common actions to avoid include buying a new car or taking out another loan while in escrow. Also, do not change your employment while in escrow, as this could make it harder to qualify for your mortgage.

After closing:

Avoiding home upkeep: One of the biggest challenges for a homeowner is the ongoing maintenance of a property. On the Dana Green Team, we provide our buyers with a copy of the “Green Book” which has contacts for our recommended vendors in a variety of industries. Subscription handyman service, Honey Homes, is also a great option if you are looking to tackle multiple projects. At closing, we also recommend purchasing a home warranty, which can help fix or replace household items if they break during the warranty period.

Let us help you land the home you love! Contact us today for a free buyer consultation and neighborhood home tour.