Why Some Homebuying Mistakes are Only Natural

red Wrong Way signage on road

For quite a while now, homebuyers have found tougher-than-usual market conditions. For openers, there was the local version of the national crunch on inventory (that is, listings with fewer homes offered than usual)—forcing buyers to pare down their ‘gotta have’ lists. In itself, that’s not always a bad thing—but after they’d zeroed in on an appealing property, they had to be aware that their offer might run into a bidding competition.

Now that the latest Federal Reserve report points to an improving inventory situation, would-be homebuyers may be encouraged to return to the hunt. That makes it an opportune time to revisit some of the homebuying mistakes that experienced buyers have learned to avoid.

Some of these have to do with financial details that first-time buyers tend to accept without question. Especially when interest rates are terrifically low, it’s understandably tempting to accept the first home loan offer that’s made. When you are presented with a monthly payment figure that is more affordable than you’d expected, the natural reaction is to accept it without question. But that could be a mistake. It’s at least worth considering whether a better deal might be possible.

Consumer advocate Dave Ramsey’s website lists 10 “mistakes” homebuyers make. Some of the pitfalls fall into what you might call the ‘not so fast’ category. A good one is Mistake #6: Getting the wrong mortgage. Since so many varieties of mortgages are now available, it’s important to realize that “most of them (ARM, FHA, VA, USDA) are designed to get you into a house no matter what your financial situation.” Ramsey points out the value in at least pausing to do the math on a 15-year fixed-rate conventional mortgage. When you see in black-and-white how great the savings would be, it might be worth working out whether the higher monthly payment might not be worth some belt-tightening.

Along the same lines is Mistake #8: Buying Mortgage Points. Paying more upfront might be tempting as a way to lower the interest rate on the mortgage—but it could be a false economy. The reason: most buyers will refinance, sell, or pay off the loan before they reach the breakeven point. This is especially true today since Ramsey’s list was created before the probability of inflation loomed as large as it does now. Paying in today’s dollars when tomorrow’s will be less valuable makes ‘buying points’ less attractive than ever.

Mistake #9 is a personal favorite. It points out the tried-and-true way to find “the right price for your perfect home,” “beat competing buyers,” and “get the most up-to-date information” on listings. The “mistake” is in Not Using a Real Estate Agent. Are you guilty of making any of these mistakes?