Common Mistakes Home Buyers Make
Buying a new home is an exciting and sometimes demanding process. The
heightened emotions and the high stakes make it extra important to find a home
that fits your family financially and “feels right.” Knowing some of the most
common mistakes home buyers make will put you in a better position to make the
best choice. Here are some things to avoid.
--Being too in love with a house.
Yes, you should love a house, but stay realistic. Don't get so smitten that you ignore your budget and overbid or refuse to accept major defects or problems with a house.
--Ignoring your instincts.
If a house doesn't feel right, it probably never will. Instead of wasting time wavering over a not-quite-right house, just move on.
--Failing to research beyond the house itself.
Don't forget to research the neighborhood, the quality of the local schools, and think about how commutes might work. Visit the house and neighborhood at different times of day, noting potential issues such as rundown houses, smells from local factories or businesses, and loud dogs.
--Waiting too long for the perfect deal or being too cautious.
Failure to make a move or procrastinating, especially in a rising market, results in missed opportunities and possibly paying more. Prices rise and fall, but the general trend is upward and waiting for a perfect deal will keep you out of the game.
--Not putting in a strong enough initial offer.
Make a strong initial offer to avoid losing out to other bidders or being rejected immediately by the seller.
--Not researching mortgages.
Know what kind of mortgage you can qualify for and get pre-approved before starting to seriously house hunt. Make sure you understand the various terms available and shop around to get the deal that's best for you.
--Not knowing your FICO score.
If it's low, make a concerted effort to raise it before seeking financing. A lower score can cost thousands of dollars in upfront fees and/or higher interest rates.
--Stretching the budget at the last minute
Some buyers get attached to a house and change their budget to make the deal happen. Decide on a budget beforehand and stick to it. If a major, unexpected problem shows up, it may be best to walk away.
--Choosing the cheapest home inspector.
The small initial money savings can result in missed problems and costly surprise repairs.
--Failing to add a contingency clause to contracts or accepting one that's too limited.
Make sure there is language in the contract so can get your deposit or “earnest money” back in case of deal breaker-type problems, like major repairs being needed, financing falling through, or your current home not selling in a timely manner.
--Not budgeting for initial costs
Not matter how “turnkey” as house looks, there are going to be additional expenses for things like furnishings, window treatments, and utility deposits. Factor in moving expenses too. Don't forget to add in other service fees for notaries, escrow, and loan applications. Many homes will also need extra insurance, such as earthquake or flood coverage.
--Not budgeting for predictable (and unpredictable) costs of homeownership.
First time home buyers often forget to factor in estimates of future major repairs and routine maintenance costs. There also may be higher utility bills, and monthly costs for things like lawn services or homeowner association dues.
--Failing to plan for the future.
Think about where you plan to be in a decade. Will you need more space for children, pets, or elderly relatives? Will the loan still be affordable for you in 10 years?
--Trying to save money by not hiring professionals.
Hiring experts during the process can save money by helping uncover or avoid problems. A buyer's agent, for example, can help you navigate the process with their expertise about neighborhoods, pricing, contracts and listings. An agent's connections can also help you in finding the best lenders and inspectors and other professionals, like contractors.
--Being too in love with a house.
Yes, you should love a house, but stay realistic. Don't get so smitten that you ignore your budget and overbid or refuse to accept major defects or problems with a house.
--Ignoring your instincts.
If a house doesn't feel right, it probably never will. Instead of wasting time wavering over a not-quite-right house, just move on.
--Failing to research beyond the house itself.
Don't forget to research the neighborhood, the quality of the local schools, and think about how commutes might work. Visit the house and neighborhood at different times of day, noting potential issues such as rundown houses, smells from local factories or businesses, and loud dogs.
--Waiting too long for the perfect deal or being too cautious.
Failure to make a move or procrastinating, especially in a rising market, results in missed opportunities and possibly paying more. Prices rise and fall, but the general trend is upward and waiting for a perfect deal will keep you out of the game.
--Not putting in a strong enough initial offer.
Make a strong initial offer to avoid losing out to other bidders or being rejected immediately by the seller.
--Not researching mortgages.
Know what kind of mortgage you can qualify for and get pre-approved before starting to seriously house hunt. Make sure you understand the various terms available and shop around to get the deal that's best for you.
--Not knowing your FICO score.
If it's low, make a concerted effort to raise it before seeking financing. A lower score can cost thousands of dollars in upfront fees and/or higher interest rates.
--Stretching the budget at the last minute
Some buyers get attached to a house and change their budget to make the deal happen. Decide on a budget beforehand and stick to it. If a major, unexpected problem shows up, it may be best to walk away.
--Choosing the cheapest home inspector.
The small initial money savings can result in missed problems and costly surprise repairs.
--Failing to add a contingency clause to contracts or accepting one that's too limited.
Make sure there is language in the contract so can get your deposit or “earnest money” back in case of deal breaker-type problems, like major repairs being needed, financing falling through, or your current home not selling in a timely manner.
--Not budgeting for initial costs
Not matter how “turnkey” as house looks, there are going to be additional expenses for things like furnishings, window treatments, and utility deposits. Factor in moving expenses too. Don't forget to add in other service fees for notaries, escrow, and loan applications. Many homes will also need extra insurance, such as earthquake or flood coverage.
--Not budgeting for predictable (and unpredictable) costs of homeownership.
First time home buyers often forget to factor in estimates of future major repairs and routine maintenance costs. There also may be higher utility bills, and monthly costs for things like lawn services or homeowner association dues.
--Failing to plan for the future.
Think about where you plan to be in a decade. Will you need more space for children, pets, or elderly relatives? Will the loan still be affordable for you in 10 years?
--Trying to save money by not hiring professionals.
Hiring experts during the process can save money by helping uncover or avoid problems. A buyer's agent, for example, can help you navigate the process with their expertise about neighborhoods, pricing, contracts and listings. An agent's connections can also help you in finding the best lenders and inspectors and other professionals, like contractors.
Jill Hamilton
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