10 Homebuying Mistakes to Avoid

We’re real estate agents by day, but we’re also homeowners. And as Pittsburgh transplants, we’ve moved around the country enough to learn an important truth: Moving into a new home is an exciting landmark decision! 

And it’s a decision that should be made carefully, especially since where you live matters. Your home has a direct influence on your happiness and every aspect of your life.

As real estate agents, we work hard to ensure our buyers make the right choices for their own unique circumstances. 

To help, we’ve compiled a list of common homebuying mistakes so that you can avoid them when you enter the market in search of a new home. 

10 Mistakes to Avoid When Buying A Home

Be sure to read this list thoroughly to avoid some preventable headaches:

1. Pursuing a home that isn’t right for you. 

You have a unique set of desires and needs, and you shouldn’t enter the market haphazardly. Start by weighing whether buying or renting is a better option for you. 

If you’re sure buying is the right choice for you and your family, take everything into consideration, including the price (which we’ll discuss in a moment) and the home’s features. While buying a home can be a nerve-wracking experience, you want it to be balanced out by excitement, not dread. And although it is possible to back out of buying a home, this is a scenario we can easily avoid by taking the proper precautions.

2. Becoming “house poor” (and making other bad financial decisions).

There’s a reason most experts recommend not spending more than a third of your income on housing: You need money for other parts of your life as well! 

But buying a house that’s too big or too expensive can make you “house poor,” which is when you spend so much money on your house, you can’t afford much else. 

But that’s not the only bad decision to avoid. Other critical financial mistakes include:

  • Draining your savings to cover your closing costs. A lack of savings means you’ll be unprepared in the event of an emergency!

  • Making too big or too small of a down payment for your circumstances. Mortgage companies may encourage you to pay 20% down because it lowers their risk and gets you off the hook for mortgage insurance, but you can sometimes get away with down payments as low as 0% or 3.5% (depending on the mortgage product). Making a smaller down payment leaves more money in your pocket!

  • Dipping into your retirement or other long-term investments to cover the cost of your home. You might have a healthy nest egg in your 401(k) or Roth IRA, but you should talk with a financial adviser about whether it makes sense to pull from that money to help buy a house. 

3. Not exploring all of your mortgage options.

There are many mortgage options out there, and they come with their own unique set of benefits. A few examples:

  • Conventional Mortgages - These are great for well-qualified, competitive buyers, and they’re the most common option. 

  • FHA Mortgages - These are ideal for DIYers with little cash on hand or lower credit scores. 

  • Renovation loans - A great option for houses you hope to customize or that need a bit of work.

4. Forgetting to budget for everything.

Your costs don’t stop at the listing price. You’re also on the hook for:

Together, these can add up to much more than your monthly mortgage payment, so you’ll want to be sure you’re ready for the extra expenses. 

5. Shopping for a home before a mortgage. 

Working with a mortgage broker before shopping for a home can put you in a much stronger position as a buyer. With a mortgage pro’s help, you can get pre-approved for a mortgage, which will help you understand your financial limitations as a buyer and enter the market with realistic expectations.

6. Getting only one quote.

You should treat your mortgage like any other major financial decision: carefully. Ultimately, a lender is selling you money, and they are willing to sell that cash for different interest rates. 

Shop around until you feel comfortable with your final decision. A single percentage point difference in your interest rate can save you hundreds of dollars each month on your mortgage! 

7. Haphazardly skipping or ignoring the inspection.

The home inspection is a critical part of the homebuying journey because it allows a neutral third party to assess whether there are any serious issues with the home. 

But we’ve recently seen a troubling trend: As the seller’s market grows more and more competitive, some anxious buyers have offered to waive the inspection altogether to make themselves seem more attractive to sellers. 

This is a dangerous tactic we don’t generally recommend. If there is a serious and unknown issue with the home, the inspection is your opportunity to uncover the issue—and potentially save tens of thousands of dollars in repairs before you move in.

8. Ignoring first-time homebuyer programs.

Numerous organizations and state/federal agencies offer first-time homebuyer programs to help individuals and families get into homes. You may even find assistance on the local level. Allegheny County, for example, occasionally offers Mortgage Financing Assistance through the Residential Finance Authority.

9. Buying at the wrong time.

We’re writing this in the middle of 2022, which is an extremely hot seller’s market. In the simplest terms, that means there’s less inventory to choose from and sellers can dramatically increase their prices. 

If you don’t need to move right now, you could potentially wait until the market cools to get a better deal. (But remember: Nobody can predict the future. While there are signs that the market may cool down, it’s possible that prices may continue to climb over the next year.)

With that said, there is some predictability you can rely on as a buyer. 

For example, the most popular time to move tends to be early or late summer, when the kids are out of school and it’s easier to take vacation time for a move. But because there are more buyers in the market, prices tend to be higher. 

If you can wait until the winter months to move, you may have less inventory to choose from, but you’re also likely to get a better price. 

10. Not thinking far enough into the future.

We generally recommend not moving unless you plan to stay put for at least a few years. Moving is an expensive ordeal, and you need time to build equity. 

But there are many factors to consider that could influence whether a home is right for you, such as:

  • Is there space for everyone? From pets to kids to multi-generational housing, life changes and along with that your housing needs may change too. Consider not only what size of home is comfortable for your current needs, but whether there’s potential for the house to grow and change with your future needs. 

  • What opportunities does the neighborhood offer? Consider what local amenities are important to you, and also explore what neighborhood organizations are available. What is the vision for future growth and change in the neighborhood, and how will this impact future value? Depending on the neighborhood’s plans for the near future, it’s entirely possible your home value could dramatically increase as the neighborhood reinvests in itself.

  • Where is your career headed? Does your job require you to travel or move to another city? If not, is it possible you’ll be promoted into a position that does? If there’s a chance you’ll need to move in the near future, you may want to avoid putting your roots down.

Find the Right Support for Your Move

Of course, we always recommend working with a real estate agent to guide your homebuying journey. A seasoned real estate professional can guide you through the twists and turns and help you make measured decisions that are best for your future. For assistance, email us at theblocks@blocksintheburgh.com. We’d be happy to help!

Cheers,

Julie & Ted