Easy Mistakes for First Time Home Buyers to Make

 

 

The details involved when buying a home can be astounding –  first time home buyers can inadvertently make mistakes that affect their ability to purchase, close, or enjoy their home.

 

Here are some situations that you can avoid:

• You haven’t checked your credit score: Saving up for a down payment is important, but have you also checked your credit score? It provides financial information that are of interest to lenders, such as your ability to pay your bills on time every month, your employment history, and your debt-to-income ratio. These details can dictate how much money you can borrow, the interest you will get, and other terms of your loan. Even if you think your credit score is good if not better, keep in mind that some details may be incorrect, and that could be to your disadvantage. You can obtain a copy of your report – for free and review it for inaccuracies before starting the house buying process.

• You do not have a home budget: Do you know how much your monthly mortgage payments will be? Your property taxes? Maintenance and renovation expenses? General living expenses? Can you afford these payments combined? If you don’t know the answer, then you need to create a household budget. List all of the items that you currently pay for, then search online or ask your real estate agent for additional costs associated specifically with home ownership. But your budget doesn’t stop there. You also need to account for the home purchase itself – that includes your down payment, appraisal fees, legal fees, inspection fees, possible credit report fees, loan application fees, moving costs, to name a few. Can you afford these expenses to make your purchase? Note that some credits are available that will cover some of these fees, and not all of these fees will apply in your situation. Talk to your real estate agent and mortgage lender about what fees you may need to cover for and budget accordingly.

• You did not get pre-approved before starting the home buying process: Getting pre-approved beforehand lets you know how much you are allowed to borrow, and therefore, how much home you can afford and which financing options are available to you. One of the first things you need to do is talk with a qualified lender and get pre-approved. Many sellers will only consider your offer if you have a letter of pre-approval. Start applying for a home loan before you even start looking for a house to set your financial expectations properly.

• You assume that your first offer will be accepted: Buying your first home is exciting, but with the housing market as it is, it is likely that yours won’t be the only offer that the sellers will receive. Try not to get too discouraged if you lose out on the first, or even second, home; eventually the right house and the right sellers will come along.

 

• You decline the home inspection: Before you sign on the dotted line, get a home inspection by a licensed, experienced professional. Can you tell if there is mold in the basement, the walls have insufficient insulation, or if there are outdoor drainage issues? You may not know, but a professional will. An inspection may seem like yet another expense, but they can tell you if the house of dreams is fraught with issues. Find an inspector who is familiar with the type, age, and features of the home as well as the region’s geographical conditions.

• You did not work with a buyer’s real estate agent: You may think you are working with a buyer’s agent when, in reality, you’re actually dealing with a seller’s agent. If you contact the agent listed with the property or walk into an open house, it’s easy to think that the agent is working in your favor.  However, you should have the option to find an agent not tied to the property. A buyer’s agent will be one of your advisers during the entire process and educate you on current market conditions, negotiate the offer and/or counteroffer, counsel on necessary inspections and property repairs and make sure your interests are protected. Ask questions, get referrals, and use someone you are comfortable with.

Before buying a home, understand what you want from your potential home purchase. Get involved right from the beginning and be your own best advocate. Be fully informed about every aspect of the process, and if you do not know the answer, then ask questions. This will save yourself undue stress and financial and emotional hardship in what can be a truly exciting

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