Buying your first home is exciting, and it also comes with dozens of decisions you have never had to make before. Most first-time buyer mistakes are not dramatic. They are small missteps -- opening a new credit card, skipping an inspection to look more competitive, forgetting about property taxes -- that add stress, cost money or even put a closing at risk.
Here are some of the most common mistakes first-time buyers make around Dallas-Fort Worth, along with simple ways to avoid them. For the full process from start to finish, the buyer's guide walks through every step in order.
Shopping Before You Are Pre-Approved
Browsing listings is fun, but touring homes before you talk to a lender can set you up for disappointment. A pre-approval means a lender has reviewed your income, assets and credit and is prepared to lend up to a certain amount, subject to final underwriting. Sellers and listing agents generally expect to see a pre-approval letter with any offer.
Just as important, the pre-approval amount is a ceiling, not a target. Decide on a monthly payment you are comfortable with before you start looking. The getting ready and home loan options sections of the buyer's guide explain how to prepare.
Budgeting Only for the Mortgage
Your monthly housing payment is usually more than principal and interest. It often includes property taxes, homeowners insurance, mortgage insurance on some loans and, in many neighborhoods, HOA dues. Then come the costs no lender collects: electricity, water, trash, internet, lawn care and routine maintenance. Build all of these into your budget before you settle on a price range.
Overlooking Texas Property Taxes
Texas has no state income tax, but local property taxes can make up a large share of a monthly payment. Your bill combines rates from several taxing units, such as the county, city, school district and, in some newer communities, a MUD or PID. Two homes at the same price can carry noticeably different tax bills.
Be careful about relying on the seller's most recent tax bill. It may reflect exemptions that belong to the seller and do not transfer to you, or a value that has not caught up with the sale price. Ask your lender for a realistic tax estimate, and read our post on Texas property taxes and hidden homeownership costs.
Changing Your Credit or Job Before Closing
A pre-approval is based on a snapshot of your finances, and lenders commonly re-check credit and employment shortly before closing. Between contract and closing, avoid opening new credit, financing furniture or a car, co-signing for anyone, moving large sums of money without a paper trail or changing jobs. If a change is unavoidable, call your lender first. Our post on what can hurt your credit score before you buy goes into more detail.
Draining Your Savings to Close
It is tempting to put every dollar toward the down payment, but you will also need money for closing costs, moving and the small surprises that come with any house. Some loan programs also require reserves left in the bank after closing. Keeping a cushion means a broken water heater in your first month is an inconvenience instead of a crisis. If a bigger cushion would help you sleep at night, ask your lender about loan programs with smaller down payment requirements.
Waiving the Inspection or Wasting the Option Period
The standard Texas resale contract allows for a negotiated option period. In exchange for an option fee, you get a set number of days during which you can terminate the contract for any reason. That window is when you should schedule a professional inspection, get estimates on anything the inspector flags, request homeowners insurance quotes and review any HOA documents.
Waiving the inspection to make an offer look stronger, or letting the option period slip by, can leave you responsible for problems you never saw coming. That applies to newer homes too. Learn more in touring and making an offer and inspections, appraisal and closing.
Falling for the House Instead of the Location
Paint, flooring and light fixtures can all be changed. Your commute, the lot, the drainage, the flood zone and what gets built across the street cannot. Before you fall for a kitchen, drive the route to work at rush hour, check the flood maps and read the HOA rules. Our guide to choosing a DFW neighborhood includes a full checklist, and you can browse areas such as Fort Worth, Arlington and Waxahachie to compare.
Going It Alone
Having your own agent means someone is looking out for your interests on price, contract terms, deadlines and negotiations. See choosing an agent for what to look for and what to ask.
Start With a Plan
Tarus Monroe began his career as a loan officer and mortgage broker, so he understands both the lending side and the real estate side of a purchase, and he walks first-time buyers through each step. When you are ready to talk about your budget, your timeline or a specific area, contact Tarus or call (972) 333-3104. You can also start browsing with the advanced home search.