We all make mistakes when we do something for the first time. Raise your hand if you or someone you know did laundry for the first time, put light-colored shirts in the same load with a new red sweatshirt, and ended up with a closet full of pink shirts. Maybe you had no idea what you were doing when you bought your first car and ended up paying 8 percent interest.

Rookie mistakes and misunderstandings happen to the best of us. But when it comes to first-time homebuyers, those mistakes can have long-term effects in terms of both cost and stress. Here are some of the most common rookie mistakes we see from our customers. Hopefully, you can avoid them:

1) Closing Costs

On average, costs such as the appraisal, underwriting, title agent, taxes, insurance, and attorney fees can add up to 2-3 percent of the purchase price of your home. For example, if you’re buying a $300,000 home, you can expect to pay $6,000-$9,000 in closing costs.

Depending on the value of the home in relation to the purchase price you have agreed on with the seller, you may be able to secure a seller concession to help cover these costs. You should discuss this with your realtor, attorney and lender before finalizing the contract.

2) Property Taxes and Homeowners Insurance

Many of those online mortgage calculators that estimate your monthly mortgage payment don’t account for property taxes and homeowner’s insurance, which can add hundreds of dollars to your monthly payment. Have a good understanding of the monthly costs for these items on each home you look at.

As for upfront costs, lenders often require you to fund an escrow account at closing. Typically, you’ll need to deposit two extra months of homeowner’s insurance and a few months’ worth of taxes into the escrow. Lastly, most lenders require one full year homeowner’s insurance premium to be paid prior to closing. The escrow account is set up to pay the premium next year upon renewal, as well the property taxes when required by the municipality.

3) Home Inspection – and Repairs

Most homebuyers know that they need a home inspection. However, not every issue shows up in the home inspection report, and the costs of repairs and upgrades are often underestimated. Some repairs are necessary just to make a home livable. Expect to spend money on your new home right away, and speak with a trusted contractor and/or engineer to get an accurate estimate of repair costs.

4) HOA Fees

Many neighborhoods and communities don’t have a homeowner’s association (HOA). But if you do, those fees are often paid on a monthly basis in addition to your mortgage. Most associations require certain fees to be paid in advance, and some charge a one-time fee to join the association.

5) Unread Agreements

You loved the light fixture in the dining room and the stainless steel kitchen appliances. But when you did your walk-through, they were gone! Make sure you read your contract before you sign it, and never assume that the seller’s possessions will be left behind.

6) Miscellaneous Costs

Moving your stuff from point A to point B costs money, even if you do it yourself. Utility companies charge fees to transfer and turn on service. Phone and internet companies charge fees to start service. Those 30 windows look fantastic, but window treatments aren’t free. Make a complete list of items and services you’ll need right away and budget accordingly.

7) Renter Mistakes

Read your lease carefully and communicate with your landlord. Many first-time homebuyers assume they’ll receive their full security deposit, only to discover that the landlord is keeping a portion of it for repairs. If the lease requires 60 days notice to break and you give 45 days, you could get hit with a fee.

8) Lack of Research

You’re not just buying the house. You’re buying the neighborhood, the community, the school system, the public services, and the commute to work. Do your homework. Visit your new home on different days and at different times of day. Do a test drive from your new home to the office. The fewer surprises, the better.

9) The Mortgage Process Is a Mystery

There are three keys to a smooth, stress-free mortgage process – education, education and education. In a previous post, we offered a basic explanation of the five stages of the mortgage process: pre-approval, application, processing, underwriting and closing. Perhaps the biggest mistake rookies make is failing to become educated about this process.

NEXT STEPS…

Thinking about buying your first home? Want to familiarize yourself with the mortgage process and avoid these rookie mistakes? The first call you make should be to your lender.

Call (732) 626-9827 or email info@go.greenwaymortgage.com today to speak with professional today. We can answer any question you may have to help you get the ball rolling.