Buying a new home is one of life’s great adventures.

As with all exciting adventures, the home-buying process also comes with certain risks. To help first-time home buyers avoid mistakes and buyer’s remorse, it's important to lay out the hidden risks and costs that could haunt them later.

By explaining what they should look out for when buying a home, you help build trust with people who might be skeptical. On the flip side, you can set proper expectations with those who might be too trusting or naive.

By establishing transparency from the beginning, you can set the stage for greater confidence and help build quality, lasting relationships with your clients.

Here are five common risks that new home buyers face and how to avoid them.

Risk #1: Skipping the mortgage pre-approval process

Getting a mortgage pre-approval is one of the most important steps in ensuring the home-buying process goes smoothly. Yet, it’s surprising how many first-time home buyers gloss over this step.

While obtaining a mortgage pre-approval can take a bit longer up front—clients will have to comb through their credit files and dig up paperwork—it can save them a lot of grief later.

With a pre-approval in hand, first-time home buyers know exactly what they can afford and won’t be as tempted to overextend their budget. And when they find the right home, they can put in an offer with greater confidence, knowing that things are less likely to backfire later.

By helping clients understand the importance of getting a mortgage pre-approval—not just crunching numbers at the kitchen table—you give them greater bargaining power and peace of mind.

Risk #2: Not taking the time to research lenders

A loan isn't just a piece of paper, it's a long-term relationship.

Signing on the dotted line is a big commitment. With so much at stake both financially and personally, it's important that new home buyers think carefully about their options—not just jump at the first loan offer that comes their way.

While interest rates, points, and other costs are important, it’s also necessary for clients to consider their personal situation, a lender's service levels, reviews, and more. By pointing out the pros and cons, buyers can get a better idea of what they're committing to.

The fact is, some loan companies don't have the lowest rates, but often have other benefits that make them the best partner for a particular client and situation. This is why it pays to help first-time home buyers step back and weigh their options.

Risk #3: Getting a mortgage that doesn’t fit

Mortgages come in many shapes and sizes. What works wonderfully for one first-time home buyer could spell trouble for another.

Before letting a client sign up for a loan, it's critical that they understand what they're signing up for. Some new home buyers may not fully understand the ramifications of an adjustable rate mortgage until their payments climb out of reach. Others may feel burned because they're stuck in a fixed-rate loan and can't break out without incurring hefty fees.

So, it's always worth sitting down with your clients to get a realistic picture of their lifestyle and spending habits. Make sure they understand the different costs that make up their monthly payment, how interest rates work, and how and when payments could rise (or fall). They will likely thank you later.

Risk #4: Not taking advantage of first-time home-buyer programs

Many first-time home buyers may feel apprehensive about entering the housing market. They may be worried about coming up with a large down payment. Or they may be concerned about a less-than-perfect credit history.

Not all first-time home buyers are aware they may qualify for government-insured loan programs, which have more lenient criteria than conventional loans. By laying out these programs to buyers, you can help ease their fears, help them qualify more easily, and reassure them you're on their side.

Risk #5: Not factoring in closing costs

Undisclosed closing costs are one of the easiest ways to lose trust with clients.

Many buyers tend to put closing costs out of their mind. They may not want to think about shelling out thousands of dollars at closing time, or they don't understand what closing costs are or what they’re for.

To make matters worse, many lenders can’t disclose these costs until just before closing. This can cause first-time home buyers to feel unnecessary stress and anxiety in the days leading up to closing.

It’s important not to let clients fall into this void. How? By providing closing costs up front with a closing cost calculator.

A closing cost calculator breaks down the numbers and provides guaranteed costs* at the time of calculation, so buyers know exactly what they’ll pay—even before buying a home. It’s a great tool that can help build trust and prevent unwanted surprises later.‍

Building trust is an opportunity for lenders

Building ongoing trust with clients is both a challenge and an opportunity for lenders. One way to overcome this challenge is by empowering first-time home buyers with the right information and putting them in driver’s seat from start to finish.

To this end, we believe it’s time to do away with fragmented systems in the title and escrow industry—systems that prevent buyers from taking control of the home-buying process. At Timios, we’ve designed a system that supports a fully transparent, holistic process throughout the entire real estate transaction.

When buyers know what’s happening at every step, it empowers them and helps build greater trust with their chosen lending partner: you.

To learn more, click here. You can get insights about creating stronger partnerships with clients throughout the home-buying experience and how Timios can step in to help.

With over 250,000 transactions and $40 billion in total closings, remaining true to our values has made Timios one of the fastest growing title and settlement services companies in America.

* Timios, Inc. is committed to assuring all title settlement fees are disclosed accurately from the day of origination and transmitted for final disclosure to the consumer. We have modified our pricing into a compliant, bundled fee making your guaranteed quote simple and accurate.

Legal Disclaimer: The information provided on this document does not, and is not intended to, constitute legal advice; instead, all information and content available on this document are for general informational purposes only.