(BPT) Buying a home for the first time is comparable to the first time you ride a bike. You can learn about how it works from your parents and observe it from a distance, but you really won't know the ins and outs until you actually sit down on the bicycle and start riding.
Like most beginners, first-time homebuyers will likely make a few mistakes as they initially go through the home-buying process. Here are five mistakes first-time homebuyers often make and how to best avoid them.
1. Waiting too long to make an offer
One of the biggest mistakes first-time homebuyers will make is simply waiting too long to get into the real estate market, according to Jay Carr, a senior loan advisor for RPM Mortgage in Newport Beach, Calif. Because the rates look like they're going to continually increase over the year, it's important for buyers to get in as early as they can, so they can avoid paying more later on. If you see a home you're interested in and you have been thinking about entering into the market for some time, don't hesitate too long.
2. Trying too hard to get less than the asking price
Many first-time buyers are younger, tech-savvy and are comfortable researching homes on their own. Overall, these are positive traits in a buyer. However, because these buyers are typically self-sufficient when it comes to other purchases, they often think they know best when it comes to what price they want to offer.
Of course, sometimes it pays off to be bold in an offer (in that you get to pay a lot less than the asking price), but often it can end up that the buyers are negotiating themselves out of a deal. It's important to pay attention to your real estate agent, who is a seasoned professional, when it comes to putting in an offer, so you don't offend the seller and lose the house you want.
3. Not exploring all your financing options
Carr says many first-time buyers have grown up thinking they need to save up for a 20 percent down payment before they can enter the housing market. While it is always great to have as much money to put down as possible before you purchase a home, it's important to consider many of the new options available today.
One option is a home ownership investment such as the Unison HomeBuyer program, which typically provides up to half of the down payment you need. The money is an investment in the home, not a loan, so there are no interest charges or monthly payments. This new type of financing — which works in combination with a traditional 30-year mortgage — can offer greater flexibility and control to the home buyer. It allows you to cut the time needed to save for a down payment in half, lower your monthly payments and avoid mortgage insurance or increase your purchasing power so you can buy the home you want.
4. Wanting the dream house right away
Everyone has a picture in their minds of what their first home will look like. Whether you envisioned a craftsman bungalow near all your favorite bars and restaurants or a classic ranch-style home with tons of land and no neighbors, chances are you're going to have to trade up to that dream home from your first starter home.
Carr advises those in the hunt for their dream home to focus on becoming homeowners now and to wait on their dream home until they have built up equity and have higher incomes in the future.
5. Not having your own representation
Another mistake a first-time homebuyer can make is not having their own representation (meaning they use the seller's agent as their own buyer's agent). While this is not always a bad situation, Carr cautions buyers to be careful they have selected a good and trustworthy real estate agent that is looking after their best interests. In other words, you don't want to pay an unfair price because someone is looking after their own best interest.
To learn more about the Unison HomeBuyer program and how it could help you, visit unison.com/homebuyer.