10 Mistakes of First-Time Buyers Buying a home may seem a daunting task, but a little preparation will ease the way. Check out these 10 common pitfalls of first-time homebuyers before starting your home search. The declining home values that are plaguing homeowners are just on of the factors creating an opportunity for prospective homebuyers. These depressed values, combined with near-record-low mortgage rates and the First-Time Homebuyer Tax Credit are luring more first-time home buyers into the market. Be aware that buying a home comes with plenty of potential missteps, which is the reason you should be working with a Realtor. Here are 10 common mistakes first-timers make. 1. Not knowing how much house you can afford.
Many novice homebuyers spend a lot of time researching homes, comparing kitchen layouts and backyard square footage, but very little time researching their financing options. One of the first things buyers should do is talk to a qualified lender and get preapproved for a mortgage. Without first figuring out how much house you can afford, you risk falling in love with a home you can't afford. Your Realtor will put you in touch with a lender that can qualify you. 2. Assuming foreclosures are great deals.
Just because the previous owner owed $450,000 on a house before the bank took it over doesn't mean it's worth that much now. Values have slipped significantly, so you may not be getting the bargain you think with a foreclosure. Also, most homes owned by lenders or banks have been sitting vacant for months and may have been vandalized, even by the previous owner. That could require extensive renovation or repair. Weigh the costs of fixing up the property against the savings you'll likely reap by buying a lower-priced foreclosed home. 3. Letting your true feeling show.
No matter how much you've fallen in love with a house, don't let the seller's agen in on it. Otherwise, he will gain the upper hand in negotiations. This is another reason you should have your on Realtor working on your side. 4. Failing to find a good buyer's agent.
Landing a mortgage is touch these days. So buyers should rely heavily on knowledgeable agents to help them get their finances in order. After all, buyers agents have a fiduciary responsiblitiy to the buyer exclusively, and should be looking out for his best interests. 5. Underestimating the costs of owning a home.
Whether it's a rusty pipe or a leaky roof, things go wrong and need to be fixed. Many homebuyers don't anticipate the additional costs of repair and maintenance, or for an increase in utility costs. Consider the age of your new home and how well it's been treated by the previous owners in your budget. Be prepared to set aside a small percentage (1% at most) of the home's purchase price annually for repairs and upkeep. 6. Failing to budget for property taxes
Property taxes-and the likelihood that they'll climb over the course of your time in the house - should be factored into any homebuying budget. 7. Assuming your first offer will get accepted.
As home prices get even more affordable, competition is bound to heat up. "You can't assume you'll walk in there, make the offer and get it." Try not to get discouraged if you lose out on the first, or second, house you make an offer on. 8. Skipping the Inspection.
Always hire a professional inspector. The seller isn't aware or likely to tell you there's anything wrong with the home. And foreclosure homes are sold AS IS, so always have an inspection.
9. Doing too much too fast.
Some buyers want to make the house their own right away. They overextend themselves on credit to do so, and assume the improvement will pay for itself by increasing the home's value. But that's not always the case - expecially in today's market. Instead, buyers need to exhibit patience and make changes over time. 10. Failing to include a contingency clause in the contract.
A mortgage financing contingency clause protects you if, say, you lose your job and the loan falls through or the appraisal price comes in over the purchase price. Should on of these events occur, the buyer gets back the money he used to secure the property. Without this clause, he can lose that money and still be obligated to buy the house. |