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Common Mistakes of First-Time Buyers in St. Louis

Mar 17, 2020 | Industry News

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There’s a first time for everything, and in hindsight, there are typically things that you would’ve done differently. Purchasing a home is no different, but buyer’s remorse on such a large investment can be devastating. It’s best to learn which mistakes to avoid to ensure you’re happy with your purchase and that you aren’t getting in over your head.


Going with the First Mortgage Quote

While this may seem like common sense, most people assume that the rates will be the same at all of the lending institutions and will typically stick with the bank where they’ve had their checking and savings accounts for years. You wouldn’t buy the first house you saw though – you would shop around, right? Same goes for shopping for a mortgage. Rates do vary from lender to lender, as do the fees such as closing costs and discount points. So shop around, ask questions, and ask for an itemized list of fees from each lender. This will save you money in the long run.


Being Unrealistic with Price

Determining the amount of house you can afford isn’t simply comparing the cost of your principal and interest against your monthly paycheck. There are additional things to take into consideration. A monthly mortgage payment will include principal and interest, as well as taxes and insurance, along with potential HOA fees and city fees, such as waste management and water bills. You also need to take into account your personal monthly expenses, like the money you spend on groceries, shopping, going out, or your weekly coffee bill. If you’re realistic in your spending habits, you will be able to purchase a home and keep your head above water.


Being Unaware of Credit

Getting approved for a home mortgage is highly dependent on your credit activity and credit score. Lenders will scrutinize your reports and decide your loan terms and rate based on it, so be sure that you have scoured through them first. It’s important to request your reports from all three agencies – Transunion, Experian, and Equifax, and go over them with a fine toothed comb. If there are any discrepancies, report them to the respective agency and request they be removed. In addition, when you’re in the process of buying a home, steer clear of adding additional lines of credit to your report, as it’ll affect your debt to income ratio and your score.


Not Having a Down Payment

While it’s true that you don’t necessarily need a large down payment to purchase a home, it’s a good idea to try and raise a down payment of 20% of the purchase price to avoid having to pay private mortgage insurance. In addition, a 20% down payment improves your loan to value ratio tremendously, allowing you to receive better interest rates, and you’ll also already have equity in your home.



Not Having Enough for Closing Costs

Many first-time home buyers solely concentrate on the purchase price of the home and their down payment, completely forgetting about closing costs. Closing costs do come out of pocket and will need to be paid in cash prior to closing. Typical fees include appraisal, origination fees, discount points, escrow and title fees, home inspection, etc. They add up and it’s important to be prepared to pay about 5% of the purchase price.


Skipping the Inspection

It may seem like a good idea to skip the home inspection to save money or sweeten the offer to the seller, but it’s a risk and may cost you money down the line. A home inspection not only verifies to the lender that the home is actually worth the purchase price, but it also will most likely identify any structural defects or unforeseen issues with the home. If issues are identified during the transaction, you can renegotiate the terms and perhaps have the seller pay for repairs.


Going in Broke

Covering your down payment and closing costs is not the only chunk of change purchasing a house requires – you should also have a contingency fund for unforeseen expenses you may incur. As a homeowner, any repairs to the home are solely your responsibility. Should a limb from a tree damage your roof, you’ll need to be prepared to fix it. If the hot water heater rusts out and needs to be replaced, you’re the one who will have to replace it. Having a rainy day fund tucked away will allow you to peace of mind should any issues occur.



Purchasing a home is rewarding, as long as you go into it with your eyes wide open.  With understanding the common mistakes home buyers make, you’re assured to make a purchase that will be the right choice for you and avoid any buyer’s remorse. 


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