Whether you’re a veteran homebuyer or a first-timer, home buying can be a challenging experience. If you’ve never bought a home before, make sure you understand and avoid some of these common mistakes, courtesy of 20-year industry expert, Rick Allen, COO of MortgageMarvel.com:
1. Not knowing how much you can afford. Before you start shopping, talk with a lender and get pre-approved for a mortgage. That way, you’ll know the price range you should be shopping within, and you won’t fall in love with a home that’s out of your reach.
2. Not fully understanding all the ins and outs of the different kinds of mortgages. If you sign on for an adjustable rate mortgage because the payments are lower now, you need to know exactly when—and by how much—the payments will increase in the future. Then, you need to be realistic about whether you’ll be able to meet the increased payments. Or if you sign on for a 15-year mortgage to pay off the debt faster, be comfortable that you can still handle the higher payments if you experience a shift in income.
3. Failing to work with an agent who represents you. If you’ve never bought a home before – or even if you have – you need a professional in your corner to give you guidance and advice on the home-buying process.
4. Underestimating the cost of owning a home. You’re going to have repairs, and your utility bills may increase. Be prepared to set aside a small percentage of the purchase price of the home (at least 1 percent) each year for repairs and maintenance.
5. Failing to budget for property taxes. It’s a fair bet that, over time, your property taxes will increase. To get some idea of possible long-term impact, talk to your local assessor’s office or people in the neighborhood.
6. Being inflexible. Everyone has a dream house in mind, but you’ll probably not be able to get everything you want. Figure out up front what you absolutely have to have and what you would like to have but could forego.
7. Not doing a home inspection. You might save a few hundred dollars by skipping the inspection, but you could get stuck with a money pit after the deal closes. Don’t commit to a purchase until you have a good idea of the house’s true physical condition.
8. Assuming a foreclosure is a great deal. All you know for sure about a foreclosure is that the previous owner couldn’t make the payments. Until the home is inspected, you don’t know what condition it’s in, especially if it has sat vacant for a long time.
9. Losing your poker face. No matter how excited you might be about a particular house, don’t let your feelings show. If you do, you can lose valuable leverage in a negotiation.
10. Failing to include a contingency clause in your contract. A mortgage financing contingency clause protects you from having to go forward with the deal if certain things happen, such as losing your job and having your loan offer withdrawn or having the appraisal come in lower than the purchase price.
Leave a Reply