Short summary: First-time home buyers in OR often make mistakes in the buying process. This post identifies and discusses 15 mistakes to avoid for first-time home buyers. Readers are also encouraged to contact Sammamish Mortgage for additional consultation on the home buying process in Oregon.
Buying a home can be a transformative experience. When you buy a home, you’re signaling that you intend to put down roots in a particular area. For Oregon buyers, this means that you’re openly cementing your relationship with one of Oregon’s cities, such as Portland, Beaverton or Salem. If you’re buying your first home in OR, there’s a heavy chance that you’ll make at least one mistake along the way. This makes sense, because the home buying process has many steps and many variables. People who are new to this process are almost certain to have at least one misstep at some point. But, with effort, first-time home buyers can certainly keep their mistakes to a minimum. In this post, we will identify and discuss 15 first-time home buyer mistakes to avoid for Oregon buyers. These tips apply to first-time home buyers in any OR city – Eugene, Portland, Beaverton, etc.
In addition to going over these potential pitfalls for first-time buyers, we encourage interested persons to get in touch with the professional at Sammamish Mortgage to learn more. The team of mortgage professionals at Sammamish Mortgage understand the ins and outs of the home buying process and are available to help you. Reach out to them today to learn more.
Not Having Enough Cash Reserves
One of the most common mistakes first-time home buyers in OR make is failing to stock up enough cash reserves before making their purchase. When you buy a home, you not only need a hefty sum for a down payment, you also need to have cash stored away to pay for the necessities of maintaining the home. Maintaining a home is not an inexpensive endeavor; there are repair costs, utilities, insurance, property taxes, and so forth. And even if you may be able to take are of these necessities with your regular income, you still need to have enough cash stocked away in the event that your regular income suddenly changes for the worse.
Too often, first-time home buyers in OR obtain conventional mortgage loans too quickly and overlook other options. Depending on their circumstances, home buyers may be better off obtaining a different type of loan, such as a VA loan or FHA loan. If a home buyer has a military background, for instance, that buyer should try to obtain a VA loan for zero money down.
Failing to Account for Maintenance and Repair Costs
First-time home buyers often fail to adequately account for the maintenance and repair costs of owning a home. Like the first mistake we identified of failing to have sufficient reserves, this mistake boils down to lack of preparation. First-time home buyers regularly assume that they won’t incur significant costs outside of their mortgage payment, home insurance and other fixed expenses. But this mistake leads them to underestimate the true costs of homeownership and very often causes financial problems down the line. Maintenance and repair costs can add up to a lot of money and so these unexpected costs need to be properly accounted for.
Another mistake commonly made by first-time home buyers is shopping around before getting approved for a mortgage loan. When you receive an approval for a mortgage, this helps you with your home selection process because you will know your mortgage limit. Mortgage loans are approved for specific limits, and if you don’t know your limit, you may end up shopping for homes you cannot afford. If you’re only approved for a $400,000 loan but you’ve “selected” a home in Portland for which you’d require a $500,000 loan, then you know you’d made an error.
Failing to Boost Your Credit in Advance
One of the factors which will contribute toward your mortgage rate is your credit rating. Sometimes, first-time home buyers rush through the home selection process before they take the time to really build up their credit report. This is understandable because first-time home buyers are typically very excited about becoming homeowners. But, it’s still unfortunate, because a lower credit rating can translate into significantly higher monthly payments via higher interest rates. If you take the time to build your credit rating, this can pay off over the long haul.
Related: How to Improve Credit Score
Failing to Thoroughly Negotiate Your Offer
First-time home buyers in OR sometimes fail to fully negotiate their offer when they make their selection. If the seller proposes a counteroffer which is $50,000 higher than the original, you shouldn’t simply accept the counteroffer without any further negotiation. Make a new offer which is halfway in between, or maybe even lower. If you haggle for a bit, you can save yourself a lot of your hard-earned money.
Failing to Shop Around for the Best Mortgage Rate
This may seem like a mistake which would be quite rare, but it’s actually more common than most people suppose. Often, first-time home buyers in OR fail to shop around with different lenders for the best mortgage rate. As we’ve discussed, lower rates can mean big savings over a long time period, and so shopping around for the best rate is very important.
Picking a House without Considering its Location
First-time home buyers often become enamored with the features of a particular home and don’t consider the wider surroundings of that home. This is something repeat buyers understand very well. When you buy a home, you’re also committing yourself to that home’s neighborhood. This involves having to deal with that’s neighborhood’s crime statistics, schools, traffic, and so forth. Before you buy a home in Portland, for instance, be sure you can tolerate the particular Eugene neighborhood in which that home is located.
Related: Best Neighborhoods in Portland OR
Forgetting to Ask Around for Gift Money
Most people are aware that buying a home usually involves a large lump sum being spent at the closing table. In many cases, first-time home buyers are assisted with this large down payment by relatives. Be sure that you ask around for gift money when you look for a home. Relatives can be very generous in situations such as these, particularly if the first-time home buyers are newlyweds.
Supposing You Need a Minimum 20% Down Payment
This is a very common mistake. The 20% down payment figure is among the most commonly cited statistic in connection with home buying. The truth is that a huge chunk of home purchases in OR and throughout the U.S. are obtained without a 20% down payment. If you’re obtaining a conventional loan, you can acquire a home with a down payment as small as 3%.
Buying Before You View Enough Prospects
It’s common for first-time buyers to rush through the buying process. One sign of rushing is failing to view enough potential homes before making a firm selection. Remember, even in a relatively tight market, there are still lots of options to choose from. If you don’t look at enough options, you may end up regretting your decision later on down the road. The buying process can often takes many months, but this is necessary to ensure you buy something you really want.
Going Solo without an Agent
Real estate agents don’t just idly sit by and accompany you through the buying process and then collect a sizable commission at the end. Agents help you in myriad ways. Agents understand the local real estate markets and the mortgage application process. They can also help you negotiate a good offer. Investing in an agent is almost always the best route to go, unless you as the buyer have specialized knowledge of the market.
Failing to Conduct an Adequate Inspection
When you go to inspect your prospective home, make sure that the inspection is thorough. Sometimes, cursory inspections fail to uncover significant costly defects. As a buyer, you want to uncover all the defects in the inspection so that those costs can be reflected in the offer. Take your time and select an inspection company which has an excellent reputation.
Getting Tunnel Vision for One Particular Home
This mistake also happens a lot. When viewing homes in OR, you may come across one home that jumps out at you and makes a strong impression. You may then be tempted to focus all your energy on that one particular home and forget to keep surveying the market. This is definitely a mistake. When you get tunnel vision, you’ll likely start to overlook flaws or defects because of your emotional attachment. And in doing so, you’ll give the current owner more power in the bargaining process. Buying a home actually shouldn’t be an emotional decision, at least not predominantly. You need to view it as a financial transaction, and having tunnel vision can easily put you at a disadvantage.
Buying Before You’re Truly Ready for Homeownership
As we mentioned at the outset, buying a home signals that you’re planting down roots in a particular community. If you buy in Beaverton, for instance, you’re signaling that you intend to build a life in Beaverton. But many first-timers buy a home without being truly ready for the stationary lifestyle which homeownership involves. Or they may not be ready for the requirements of homeownership.
The Professionals at Sammamish Mortgage Can Help You Today
As you can see, first-time home buyers in OR can make all sorts of different mistakes. This is true regardless of whether the first-time buyer is located in Portland, Beaverton or another OR city. Some of these mistakes may be more common than others, but without adequate preparation, any of these missteps can occur. Fortunately, mortgage professionals can help you better understand the home buying process and watch out for these pitfalls. The earlier you contact us in the buying process, the better we can assist you. If you’d like to learn more, Contact Us to speak to one of our professionals. You can also take time and View Rates, or get a Rate Quote, or even Apply Now to get the process started. We’ve been serving customers in OR for over 25 years and we’d be delighted to work with you!