In a perfect world, we’d never make mistakes and all of our decisions would turn out exactly as planned. Unfortunately, that isn’t realistic or even possible. It’s even less so when we’re put into new and unfamiliar situations, like buying a house for the first time or deciding which mortgage type is best for you. After all, if you don’t have any experience doing something, you’re inevitably going to make a few missteps. Here are a few of the most common mistakes first time home buyers make.
1. Not having a down payment
Buying your first house can present challenges that you likely won’t find when buying your second or subsequent homes. Among them, having the down payment tops the list. After all, a current homeowner can use the sale of their house to help fund the upfront costs of buying another. However, without a house to sell, you’ll likely have to come up with a down payment the old fashioned way: by saving for it. That can be difficult if, for example, you’re paying rent, have student loans, or are just getting started in your career and aren’t making much money yet.
There is good news, though. For starters, you’ll have options. Not all loans require a 20% down payment. Depending on the terms of your loan, you may be able to put much less down upfront in exchange for a higher monthly mortgage payment. You can also look into down payment assistance programs or use a gift from a family member to help gather the money. What you can’t do is expect to buy your first house without having put some thought into where the money will come from. Check out Flagstar’s down payment calculator for an estimate on how much you'll need to save in order to purchase your first home.
2. Having unreasonable expectations
If you’re thinking of buying a house, you’ve no doubt given some thought to all of the things you’d like to have. Dreaming of your new life in your new home is exciting, but it can lead to some pretty unreasonable expectations. Unless you’re building a custom home, you may have to compromise.
If you’re expecting to find all of the items on your wish list in one house, you may well end up passing up a great house. Before looking at homes to buy, work with your Realtor to learn about what’s most important for you to focus on. This will help you make better decisions and reduce the risk of losing a good house to a more realistic buyer.
3. Not considering all of the costs
There are a couple of numbers that get the most attention from buyers. Your down payment is one of them. The other is your monthly mortgage payment. However, first time home buyers who make the mistake of just focusing on the most obvious costs may be missing some of the other expenses of buying a house.
For example, before you get the keys to your house, you’ll have to pay closing costs. These can be significant and an unwelcome surprise if you haven’t planned for them. In addition, you’ll also need to have money to cover any moving expenses, possible repairs/renovations, as well as any needed furniture, supplies, or appliances. Then, after you’ve settled in, you'll need to be prepared for any unexpected emergencies and routine maintenance that arise along the way.
In short, don’t make the mistake of focusing on the big-ticket items and not taking a careful look at all of the costs and responsibilities of becoming a homeowner. Understand the costs associated with first-time home buying through Flagstar’s monthly mortgage payment and closing cost calculators.
Get a personalized home loan solution
When you work with our home loan advisors, you’ll know you’re in good hands. We are well-versed in all types of purchases (from homes to condos), offer competitive interest rates, and find the right solution for your unique situation.
Buying a home is a wonderful and rewarding endeavor. Contact us to help you get started. As your home loan advisor, we can help you avoid common home-buying mistakes and provide financing solutions that can help make your buying experience a success..
