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5 First Home buying mistakes to avoid

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Homeownership is still a significant dream for many people, but there are numerous issues buyers need to be aware of when shopping for a home. Rather than being a dream come true, buying a home can quickly become a nightmare if a purchase is rushed. Here are five mistakes to avoid when purchasing a home.


Missing Legal Issues


Purchasing a home requires signing a variety of legal documents. It’s a good idea to have an attorney review all documents prior to signing them. Those documents range from an agent representation agreement to closing documents. Even a minor error in a document can prove to be costly later, so hire a lawyer to go over every document.


Ignoring Budget Realities


Real estate industry experts all agree that anyone shopping for a home should visit a lender and be prequalified or preapproved for a mortgage before contacting a real estate agent to look at properties. Many agents will also insist that prospective buyers be preapproved before shopping for a home. It’s vitally important to know what you can afford to spend when browsing the area’s homes for sale. It’s also a good idea to avoid spending more than you’re pre qualified for with the idea you’ll be making more money in the future. In some cases, that will be true, but taking any risks is not a good idea when the economy is as unsettled as it is today. Evaluate your real home needs as well all financial commitments prior to making an offer to purchase a home.


Accepting the Wrong Type of Mortgage


Virtually every home can be financed by more than one type of mortgage.The long-term costs of mortgages will vary significantly, so don’t accept the first proposal from a lender without exploring all the available options. VA, FHA, and conventional mortgages have different closing costs and interest rates, so shop carefully when looking for a mortgage.


Overlooking Faults


A home may be in an ideal neighborhood and be the style you’re looking for, but if there are substantial issues present, making an offer isn’t a good idea. Even if the issues with a home appear to be relatively minor, the repair costs can be devastating. Underlying issues can easily cost far more to fix than a buyer can comfortably afford. Even when a home looks good, a home inspection often uncovers major issues. Rewiring a home or making expensive upgrades to the home’s heating and cooling system frequently add costs that push the home’s real price out of reach. If major issues are discovered during an inspection, and the seller won’t make the repairs, look for a different house.


Not Considering All Homeownership Expenses


When purchasing a home, the mortgage will generally be the single largest
expense, but there are other costs to consider. According to national statistics, normal annual maintenance expenses are roughly one to four percent of a home’s value. On a $200,000 home, that means buyers should expect to spend between $2,000 and $8,000 per year for normal maintenance. Replacing appliances, repairing storm damage, and even having a tree removed are all issues property owners routinely experience. Make sure enough money is held in reserve to deal with those types of expenses.


Ready to Shop for your first home?


If you’re ready to start looking for your first home, start by putting a team of experts together to provide the help you’ll need. An attorney, a lender, and a real estate agent should all be parts of that team.

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Guest Bloggers, Uncategorized

6 mistakes to avoid as a first-time home buyer

6-mistakes-to-avoid-as-a-first-time-home-buyer

Buying a home for the first time is a big deal.

To help you get ahead, we’ve outlined some first-time homebuyer tips by calling out six of the biggest mistakes that you should avoid going into the purchase of your first home that could end up saving you a lot of time, money, and frustration.

Mistake #1: not getting pre-approved

Many first-time buyers make the mistake of thinking that they don’t need to get approved for a mortgage until they’ve found their dream home.

Unfortunately, that often ends up being too late.

These days, most sellers require that pre-approvals be submitted along with any offer, and, since your finances need to be vetted before the lender will agree to grant you a loan, this process can take days or even weeks.

Instead, we recommend applying for a pre-approval before you even start looking at a available properties.

Doing so will give you extra time to work on your finances, if needed, and will ensure that you’re ready to submit an offer ASAP once you’ve found your perfect match.

2. Borrowing the maximum amount

Once you have your pre-approval in hand, it’s time to decide how much you can afford to spend.

Many buyers mistakenly believe that the figure they’re given on their pre-approval letter should serve as their target sale price. However, make sure that this move won’t leave you feeling “house poor.”

Instead, it’s better to think of loan amounts as a range. You have the ability to borrow up to the amount on your pre-approval, but you don’t necessarily have to go that far.

The better move is to do some budgeting of your own.

First, look at your income and expenses to determine how much money you’d feel comfortable putting towards a mortgage payment each month. Then, using that number, play around with a mortgage calculator until you land on a price of how much house you can really afford.

3. Overestimating your abilities

Sometimes buyers are willing to take on any number of repairs and remodelling projects in exchange for for a low sale price.

Unfortunately, though, what ends up happening in many of these scenarios is that they end up finding that these properties were steals for a reason.

Often, the repairs require more time, money, and skills than the buyers can afford.

If you’re looking at fixer upper properties that require a lot of TLC — especially foreclosures, short sales, or auctions — you need to be honest with yourself about your abilities.

Do you have any previous remodeling experience? Can you afford to hire professional help? Are you prepared to cope with unforeseen problems and expenses?

Though some of these things may be hard to admit, doing so can end up saving you a lot of frustration in the long run.

4. Skipping the fine print

Yes, you should always read every contract you sign in full.

But, as anyone who’s ever sped through a “Terms & Conditions” agreement can tell you, that’s easier said than done.

While it might be tempting to simply skim your Agreement of Sale (and any addendums), resist the urge. This mistake could end up costing you.

Successful real estate transactions depend on each party fulfilling their respective contingencies by the deadlines specified in the agreement.

By signing, you’ve agreed to fulfill your end of the bargain. If you fail to meet those obligations, the seller may be entitled to take your deposit monies in reparations.

When you’re negotiating your offer, make sure you know exactly what you’re agreeing to before you sign on the dotted line.

5. Bypassing your inspections

Conventional wisdom states that skipping your inspections will put you in a better bargaining position. While this is true, the reality is inspections are for the buyer’s benefit.

They give you a realistic picture of what’s wrong with the property, so that you can either choose to buy it with eyes-wide-open and negotiate on repairs or walk away and find a more suitable option.

In contrast, when you choose to waive your inspections, you’ve agreed to take financial responsibility for any repairs that may come up, even if the problems pre-date your ownership of the property. Weigh your options carefully before deciding whether or not this risk is worth it to you. In some cases, just shortening your inspection contingency might be enough to make your offer more competitive.

6. Forgetting about closing costs

Budgeting to buy a home isn’t just about figuring out how you’ll swing a downpayment and monthly mortgage amount.

There are also closing costs to consider.

Your closing costs will be paid at settlement. They will include any fees needed to facilitate the transaction such as deed-recording fees, title insurance, and appraisal costs.

The exact amount you’ll pay will depend on the specific services needed to close on your property. Realistically, however, you can expect to pay between 2%-5% of the home’s purchase price, and that needs to be factored into your overall cost of buying a place.


This article originally appeared on OpenListings.

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Guest Bloggers

Open House Tips For First-Time Buyers

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While open houses seem pretty casual, savvy buyers know that checking out a home isn’t just about aesthetics or a quick view. In today’s hot market, you might not get another look before making an offer. If you’re seriously interested in a home, get a feel for the things you can’t change: the neighborhood & ongoing home maintenance needs. You should also get critical details such as when offers are due.

If you aren’t totally sure about how the open-house process works, you aren’t alone. Sometimes home buyers visit an open house to window shop instead of taking full advantage of the opportunity to get important details about the home. When you visit an open house, you should have several questions prepared for the seller’s agent and you should have already conducted some research, too. You want to leave this process feeling that you have enough information to make a well-informed decision.

Here’s what you need to know about the open-house process:

Open house etiquette

It may not be a fashion show, but it’s important to leave a good impression on the listing agent. Bringing your business casual A-game will help you look like a serious buyer. Don’t rush – make sure you get a chance to visit each room and get a feel for the look and smell of the place. Be courteous to the agent and don’t be afraid to ask questions.

What to look for at an Open House

If allowed, you should take pictures of the inside and outside of the house. On the interior of the home, you should be looking for uneven floors, water stains, signs of cracks in the ceilings or walls, and mold. On the exterior, you’ll want to see if there’s any damage to outer walls, or if the roof has any tiles missing. If you can easily spot damage to the home, then it might not be worth your time. it’s important to consider that there may be repairs you’ll need to factor into your budget if you decide to make an offer on the home.

How to take the pulse of the competition

Are other prospective home buyers at the open house? How serious do they seem about the process? Are they asking questions? Do they have a checklist? Be on the lookout when you enter the home. These are potential home buyers who might also make an offer on the property.

Make sure you are memorable

You want to try and ensure that the agent remembers you. Building a good relationship with the agent can be key if you decide to make an offer on the home. Tell a short story about yourself, or ask the agent about their family or how they got started in the real estate business. Make a genuine effort to get to know them in the short period of time you spend at the home. Agents are people too, and people remember those who make an effort.

Know which questions to ask

By now, you know that an open house isn’t just a casual gathering of interested buyers, sellers and real estate agents. It is a major opportunity for you to feel out the home while also getting critical information.

You are probably still wondering what to ask at an open house. You should have several questions prepared, as the open house might be the only chance you get to ask them. If the home is a hot commodity, then other potential buyers might be looking to put in an offer soon. You want to get as much information as possible during the open house so that you can make an informed decision on whether or not you want to go forward with an offer of your own.

Here is a helpful checklist of questions to get answered on your open house tour:

  1. How many offers have been made?

You should always ask the real estate agent if any offers have already been made. If there are multiple offers on the home, it could indicate that the property might sell quickly. If there aren’t any offers yet, then the opposite might be true. Real estate agents hope that multiple offers will push up the sales price of the home. Keep your budget in mind — even if you love the home, you don’t want to get into a bidding war with other prospective buyers if the result is an unaffordable price.

  1. Why are the sellers moving?

The sellers could be moving because one of the owners got a new job across the country. Or they could be moving because the home’s maintenance is unaffordable and the repairs are getting more burdensome. Always make sure to ask the real estate agent why the sellers are moving. If they give a strange or off-putting reason, take note. The last thing you want to do is move into a house the owners sold because of bad neighbors, rising crime or failing schools.

  1. How long has the property been on the market? Why?

Learning how long a property has been on the market will allow you to make a knowledgeable offer. Make sure to ask the agent, but also verify their claim with a listing service. It could have been on the market for a while because a previous buyer’s financing didn’t come through. Or maybe the property just went on the market this month and there are plenty of suitors. The context will provide you with useful information that gives you a better idea of how fast you’ll need to take action and how competitive the offer process might be.

  1. When was the house built? Has it ever gotten any updates?

You want to make sure that you know when the home was built and if there have been any updates or renovations. Check on key features of the home, such as the roof, piping or electrical wiring. If you are purchasing an older home and there have been no recent updates of these features, you should be wary — you might have to make those repairs at significant cost in the near future.

  1. What are the costs of utilities?

Too often, utilities are an afterthought in the home-buying process. But this is a property you are thinking about living in, and that means you’ll need lights, running water, heat, air conditioning and working sewer pipes. Ask the agent if he or she knows a ballpark of what utilities cost. You don’t want to get further into the process just to find out that the utilities on the property will have a significantly adverse effect on your budget.

  1. How eager is the seller to sell the property? Is it an urgent sale or can it happen at any time?

Just as it is important to know why the seller is moving, it is also important to know how eager they are to sell and what their timeline looks like. If the seller needs to offload the house in a hurry, then perhaps they might be willing to consider a lower offer. But if the seller isn’t motivated, then the process might not move very quickly.

  1. What are the neighbors like? Have there ever been any issues?

You aren’t just buying a property. You are also going to be spending the majority of your time in a new neighborhood. Even if you like the property, do you really want to live in a neighborhood you don’t feel comfortable in? Ask the real estate agent about the neighbors and make sure there haven’t been any issues. You’ll also want to check online and look at the local shops and eateries. Visit a few and see if they match your lifestyle and meet your needs.

  1. What/where are the schools? How are they rated?

Schools are a huge issue for home buyers. You can check how the local school district is rated online, but nothing beats asking people in person. How do they feel the local schools are serving the students? Even if kids aren’t in your near future, the quality of your school district will eventually impact your home’s resell value.

  1. What other homes should you check out in the neighborhood? Why?

Real estate agents aren’t just selling one home. There are likely other sellers in the area that they represent as well. If you aren’t totally sold on the home you are visiting during the open house, ask the agent if there are any other homes nearby that you should check out. You’d be surprised how often buyers find helpful information this way.

This article originally appeared on OpenListings.

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