Buying your first home is an exciting milestone, but it can also be filled with potential missteps if you’re not prepared. As a San Diego mortgage loan officer with over 20 years of experience helping first-time homebuyers navigate the process, I want to help you avoid some common mistakes new buyers often make.
The key to success as a first-time homebuyer is doing your research. Before you start looking at homes, take time to educate yourself on the homebuying process, get pre-qualified for a mortgage, and set realistic expectations. I know the idea of owning your own home is thrilling, but you’ll be setting yourself up for success if you study up on neighborhoods, schools, commute times, hidden ownership costs, and the many financial aspects of home buying.
I’ve seen many first-timers rush into home ownership only to regret not taking more time on the front end. Don’t let that happen to you! My goal is to guide you through every step and ensure you find the perfect home at the right price. Buying a house is likely the biggest investment you’ll ever make, so let’s work together to avoid mistakes and start you on the path to becoming a happy, informed homeowner.
Having Unrealistic Expectations
Many first-time buyers have unrealistic ideas about the homebuying process. Here are some of the most common misconceptions I encounter:
“I Can’t Afford a Home”
Don’t assume you’re priced out of the market. I can help assess your budget and find loan options that work for you. Many buyers don’t realize they can qualify for low down payment FHA loans or take advantage of down payment assistance programs.
“My First Home Will Be Perfect”
It’s rare to find a perfect home, especially right out of the gate. Keep an open mind about “starter” homes with potential. Over time you can make upgrades. Focus on finding a home in your target location that meets your basic needs and budget first.
“I Won’t Compromise on Location”
While location is important, remaining flexible opens up more options. Expand your neighborhood search and consider homes that may require a slightly longer commute but are more affordable.
“I Should Waive the Inspection”
Never waive the inspection contingency, even in a competitive market. An inspection protects you from buying a money pit. If issues arise, I can help you renegotiate with the seller.
“I Don’t Need an Agent”
A real estate agent will help you find homes, schedule tours, submit offers, and negotiate the purchase. Their expertise and guidance can make your home search much smoother.
By shedding unrealistic expectations, educating yourself, and working with a trusted team, you’ll be primed for home buying success in San Diego! Let’s connect to start mapping out your homeowner journey today.
Not Saving Enough for a Down Payment
One of the biggest setbacks for first-time homebuyers is not saving enough for a down payment and closing costs. Here are some tips:
- Aim to save at least 20% of the purchase price for a conventional loan. This helps you avoid private mortgage insurance (PMI).
- With an FHA loan you can qualify with just 3.5% down, but a higher down payment gets you a better rate.
- Shop around with various lenders to see your loan options at different down payment levels. I can help assess the best mortgage products for your financial situation.
- If you’re struggling to save enough, down payment assistance programs provide grants or loans to qualified buyers. Income limits apply, but I can determine your eligibility.
Down Payment Minimums
| Loan Type | Down Payment |
|---|---|
| Conventional | 20% |
| FHA | 3.5% |
| VA | 0% |
- The more you put down, the better mortgage rate you can qualify for, saving money over the life of the loan.
By planning ahead and budgeting, you can build up your down payment fund over time. My team can help you analyze your finances to determine a realistic savings timeline and goal. A sufficient down payment is key to making your first home purchase achievable. Let’s connect today to get you on the right track.
Overlooking Closing Costs
In addition to your down payment, don’t forget to budget for closing costs when buying your first home. Closing costs typically range from 2-5% of the total purchase price. They include:
- Origination fees
- Appraisal fees
- Title insurance
- Escrow fees
- Prepaid property taxes
- Homeowners insurance
- Recording fees
- Home inspection fees
I recommend requesting a Loan Estimate from your lender early in the process. This will outline estimated closing costs based on your specific loan amount, rate, and down payment.
Having your closing costs saved makes the transaction smoother. Closing costs are due at the time of purchase, unless you roll them into your mortgage loan amount.
The benefit is that closing costs are tax deductible in the year you purchase your home. Save your closing statements to write off qualifying costs when you file taxes.
With an experienced San Diego lender guiding you, there won’t be any surprise expenses at closing time. I’m here to provide a transparent estimate of total costs and help you financially prepare. Let’s review your budget and savings timeline!
Not Getting Pre-Approved
One of the most important early steps for first-time homebuyers is getting pre-approved for a mortgage. Here’s why:
- Pre-approval provides you an estimate of what you can afford and your estimated payment. This helps you set your price range.
- It shows sellers you are a serious, qualified buyer. Your offer will look stronger.
- The pre-approval process surfaces any credit or financial issues early so they can be addressed.
- You can compare multiple lender quotes to find the best rates/fees for your situation.
- It locks in an interest rate for a set period while you search for a home.
I recommend speaking to at least 3 mortgage lenders and getting pre-approved with your top choice. This takes some legwork upfront, but will pay off when you submit a competitive offer backed by financing.
Making an Emotional Home Purchase
It’s easy to get caught up in emotions when buying your first home. But try not to let excitement overrule logic:
- Don’t buy just because you “fall in love” with the staging or curb appeal. Make sure the home meets your practical needs.
- Look beyond cosmetic fixes. Ensure major systems like the roof and furnace are in good shape.
- Don’t waive inspections or rush the purchase, even if you really want the home.
- Weigh the pros and cons objectively vs. relying on emotions. Make a master checklist.
- Bring a level-headed friend or family member along to tours to give feedback.
- Discuss any concerns openly with your agent early, not after you’re under contract.
- Be wary of making spur-of-the-moment offers over asking price. Set a ceiling based on comparables.
Waiving Contingencies
In competitive markets, some buyers waive key contingencies to try to make their offer more attractive to sellers. But this is risky for first-timers. Here are my contingency waiver tips:
Never Waive:
- Home inspection contingency – An inspection protects you from buying undisclosed property defects. If issues arise, I can help you renegotiate repairs with the seller.
Use Caution When Waiving:
- Appraisal contingency – If the appraisal comes under purchase price, you’ll need to pay the difference out of pocket.
- Financing contingency – If your loan falls through, you can lose your earnest money deposit.
Instead of waiving, keep contingencies but:
- Agree to a smaller earnest money deposit.
- Offer an escalation clause to beat other bids.
- Shorten contingency timelines.
Not Hiring an Agent
First-time buyers often wonder if they really need a real estate agent. My advice – working with an agent can make your home search much easier! Here are some key benefits:
- An agent will take care of scheduling home tours for you. No need to coordinate with multiple sellers yourself.
- Agents have access to MLS listings and can send you options as soon as they hit the market.
- They’ll provide insights on neighborhoods, pricing trends, and property values to inform your offer.
- Agents handle negotiations expertly, advocating for your best interests.
- They ensure all contracts and paperwork are handled and filed properly.
- Their relationships with other agents can give your offer an edge.
Not Asking Enough Questions
When buying your first home, don’t be afraid to ask lots of questions! Being an informed buyer will prevent surprises down the road. Some key questions to ask:
Financing:
- What are the total fees and closing costs for my loan?
- What rate lock timeframes can I choose?
- Are there any extra charges or discounts I qualify for?
The Property:
- What renovations or upgrades have been done?
- What are the utility costs and property tax rates?
- What does the inspection report show?
The Transaction:
- What are my responsibilities during escrow?
- When is each payment due (earnest money, down payment, closing costs etc.)?
- What happens if appraisal or inspection contingencies fall through?
Your Lender & Agent:
- How many first-time homebuyer deals have you done?
- How will you support me through the closing process?
- What do I need to do to ensure a smooth transaction?
Rushing the Home Buying Process
The excitement of buying your first home can tempt you to try to accelerate through the purchase process. But it’s important not to let that enthusiasm result in costly mistakes. As your experienced mortgage advisor, I always recommend first-time buyers resist the urge to rush, and instead follow a gradual, methodical timeline.
One of the biggest mistakes is setting an unrealistic target move-in date, then scrambling to meet it. Life events like a new job, marriage, or baby might motivate you to get into a new home ASAP. But an arbitrary deadline often leads to hurried choices. Give yourself flexibility on timing.
Similarly, impulse offers after a quick 15 minute tour are risky. You notice cute finishes or charm, and get swept up in the emotion. But you owe it to yourself to thoroughly assess any home before submitting an offer. Don’t rely on a superficial first impression.
Many buyers also wait until deep into their home search to get pre-approved. But securing financing in advance provides you leverage with sellers. Don’t scramble to talk to lenders at the last minute.
Adequate savings is key as well. Don’t drain your reserves on a down payment and expect to fund closing costs later. Rushing can leave you short. Take time to amass funds.
And never waive protections like inspections just to act quickly in a bidding war. That’s a recipe for disappointment. Patience pays off.
Instead, map out a gradual timeline, allowing 2-3 months to get pre-approved, 2-3 months to view homes, and 30-45 days for the closing process.
As your lender, I’m happy to provide a detailed checklist and help you set realistic target timeframes. I want you to feel informed and at ease, not rushed. Together we’ll take it step-by-step to find the perfect home for you!
