When Buying A Home
Whether you're looking for a first home, which often establishes the foundation for your future home purchases, or your last home where you'll spend your senior years, following are some mistakes to avoid and suggestions to assist you in making the best choice.
Get Pre-Qualified
Not getting pre-approved or pre-qualified by a bank or lending institution is one of the first mistakes many people make. Sellers are likely to be skeptical of your ability to obtain a mortgage loan if you have not been pre-qualified. When they're choosing between 2 comparable offers, or when considering countering a buyer's offer, a seller will always look more favorably upon a pre-qualified buyer.
Have Your Own Realtor
The services of a realtor are indispensable to help you navigate through the process of buying a home; a process both complicated and fraught with financial hazards. As the buyer, you'll need to have your own realtor who will be committed to representing your best interests. The seller's realtor will often favor the interests of the seller, with an eye to the commission involved.
One of the things your agent should do is a comparative market analysis to establish property values and selling prices of homes in your targeted area.
Take Your Time
Don't be in a hurry! All too frequently people rush into signing a contract to purchase a particular home and then, for any of a number of reasons, regret it. If you enter into a contract to buy a home, your chances of later getting that contract rescinded are very slim. Even though you may find another home you prefer, when you're under contract to make a purchase, you're expected to follow through and buy it.
You can prevent this kind of situation by taking plenty of time to consider any house that interests you.
Don't Over-Spend
Another reason people sometimes try to withdraw from a contract is they realize too late that they've over-purchased. The mere fact that you can qualify to purchase a particular property doesn't mean you can afford it.
It is no fun being "house poor." Putting too large a portion of your earnings into your mortgage payment detracts from your quality of life. Things you used to enjoy, such as vacation trips, dinners out or splurging on an expensive piece of clothing will have to be curtailed, very likely for a long time.
Don't Wait For Utopia
It often happens that people have specific, detailed requirements for their dream home, and they search endlessly for the right house to fulfill them. Unfortunately, they sometimes wait too long.
While pursuing utopia, people can pass up excellent homes that are good bargains and would fulfill a majority of their needs. Meanwhile, market prices and mortgage rates continue to escalate, putting good deals beyond their reach.
Explore Your Financing Options
As a potential buyer, you should be aware that there are many types of mortgages being offered by lenders. Thoroughly explore all of your options before getting yourself "locked in." An interest-only loan will allow the buyer to pay only the interest on their mortgage for a period of up to 5 years. For young buyers who want to establish themselves in a home of their own, but haven't yet reached their full earning potential, this is an attractive option. To benefit from this type of financing, the buyers should be better able to meet full mortgage payments at the end of the prescribed 1- to 5-year period.
A number of other options should also be explored.
Get A Professional Inspection
It is absolutely essential to have a comprehensive home inspection conducted by a professional. Relying on the knowledge of a friend is a penny-wise/pound-foolish thing to do. The comparatively minor expense of a full inspection is well worth the price. A review of the electrical system, the condition of the roof, plumbing, heating and air conditioning, septic system, and water quality, at a minimum, should be included in the inspection. This is a critical process that can save you a lot of anguish down the road.
As a real world example, on my current home I spent $500 for a home inspection. The inspector found several short-comings that neither the seller nor I was aware of. As a result of that objective written appraisal, $14,000 was knocked off of our already agreed upon (but "subject to satisfactory inspection") purchase price.
How's The Neighborhood?
Don't forget when selecting a home that your quality of life will also be affected by the surrounding community. No matter how beautiful your new home is, if it's in a rundown neighborhood and populated with neighbors you don't want to know, you aren't going to be happy.
Check out the school system and be sure that it meets with your approval. Inquire about the crime rate and consider the quality of the stores and services available in the vicinity.
Consider Resale Value
When you're focused on now, it can be hard to consider the future. However, resale value is one of the primary considerations in the decision to buy a home. Of course, this isn't the final consideration, but when touring your prospective new home keep an eye out for things that would be a deterrent to another buyer. If the problems you see are all minor and/or repairable, then your worries will be few.
Research Community Restrictions
Last but not least, before you sign the contract, become aware of any restrictions imposed by your new community association. Restrictions might include: certain landscaping requirements, parking restrictions, no RVs or boats in the yard, certain occupancy restrictions, and fencing guidelines, as well. Investing in a heavily restricted community without first doing your research is a mistake, and a very common one.
Do Your Homework
This is by no means an exhaustive list of the common home buying hazards to beware. Purchasing a home is a big undertaking, which should be done carefully and systematically.
Reputable realtors offer checklists that can be very useful throughout the searching and home buying process. Avoiding the pitfalls enumerated here should make your search for a new home both easier and more rewarding
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