Top 10 Buyer Mistakes
If you want to buy a home, now is the perfect time to prepare. The purchase of a home or townhouse is not just the acquisition of your own home, but probably your best investment ever. For most people, their home purchase is their largest lifetime investment, yet many home buyers make costly mistakes. Here is a list of the most common errors and how to avoid them:
Home buyer mistake # 1: Never buying the first home.
Many first-time buyers purchase a home because it is such an improvement over a renting situation yet many others never take the leap. Take all the time you need to view homes and make a sound home buying decision, but don't be afraid to commit to a new home purchase. Cold feet are natural, but don't miss out on your dream home.
Home buyer mistake # 2: Choosing the wrong agent.
Don't make buying a home more difficult by choosing the wrong agent. You want a buyer's agent who works for you and understands your needs and financial limitations. Your agent should spend time with you and walk you through the process so it's important to choose someone who is both competent and enjoyable to work with.
Home buyer mistake # 3: Shopping for homes before shopping for a mortgage.
Buyers who look at homes before talking with a lender are shopping without a budget. When you talk to a mortgage broker you'll get a better idea of the loan options and the price ranges you can afford. After completing the pre-approval process, you will be a more educated consumer ready to buy a home. Asking for referrals to a few prospective mortgage companies can be a good way to find someone you can trust. Interview prospective loan officers and ask questions until you feel comfortable.
Home buyer mistake # 4: Skipping the inspection process.
Failure to have the property professionally inspected for structural, mechanical, safety, and environmental defects can lead to buying the wrong home. Inspections turn buyers into informed consumers. Knowing as much as possible about your home purchase will allow you to make an informed decision, so don't skip the inspection process.
Home buyer mistake # 5: Buying a home that won't sell.
Many first time buyers sell their home in just a few years. Carefully consider all the negatives. Get a neutral opinion from a friend or relative who is familiar with the area. There are many things to consider for resale and your agent is another good source for this type of information.
Home buyer mistake # 6: Buying the wrong size home.
View your home purchase in the long term. Consider lifestyle changes and family dynamics when choosing your home. Are a home based business or do you have kids in your future plans? There are costs associated with buying and selling a home and these costs quickly eat away at any equity so be sure to plan accordingly and buy the right size home.
Home buyer mistake # 7: Choosing a lender just because they have the lowest rate.
While the rate is important, consider the total cost of your loan including the APR, loan fees, discount and origination points. When receiving a quote from a lender or broker, insist that the discount points (charged by the lender to reduce the interest rate) be distinguished from origination points (charged for services rendered in originating the loan).
The cost of the mortgage, however, shouldn't be your only criterion. Be sure to do your homework so you can have confidence that the company you select is reputable and will deliver the loan with the terms and costs they promise. If, in the final hours of the transaction, you determine that the lender has suddenly increased their profit margin at your expense, you won't have time to start again with a different lender.
Also, sit down with your mortgage broker to get all the specifics on the mortgage you are considering. There are many alternatives to the 30-year loan. Choose the one which best suits your needs.
Home buyer mistake # 8: Buying a home with an incurable defect.
Whether you are considering a new build or an older home, no residence is perfect. Fortunately, most homes don't have incurable defects. These obvious problems include a bad floor plan, poor location (such as near a noisy freeway or adjacent to the city dump), heavy street traffic and lack of adequate parking. In most cases, these issues cannot be resolved by the buyer and will still be an issue when the home is sold at a later date. Be sure to avoid these types of defects or at least consider them when determining the price you'll pay for a home.
Home buyer mistake # 9: Buying the most expensive home on the block.
It's wonderful when you find your dream home, but if it's the most expensive home on the block you could have a problem. Quite simply, your neighbors' lower home values will dampen yours. Remember, people who buy a $500,000 home usually want to be surrounded by other $500,000 homes, not tiny $100,000 bungalows.
Home buyer mistake # 10: Not allowing for delays in the transaction.
In a perfect world, all real estate transactions close on time. In the world we live in, transactions are often delayed a week or more. Suppose you asked your landlord to terminate your lease the day your purchase transaction was scheduled to close. A day or two before your scheduled closing date, you discover your transaction is delayed a week. In a perfect world, no one is inconvenienced and your landlord is willing to work with you. More likely, however, your landlord is inconvenienced and angry. Will you be thrown out? Will you have to find interim housing for a week or more?
The eviction process takes a little time, so the Sheriff won't immediately remove you, but this type of stress-producing episode can be avoided. How? Terminate your lease one week after your real estate transaction is scheduled to close. That way, if there is a delay in closing your transaction, you have some leeway. This approach might cost a little more, then again, it might not.
This type of delay can present many problems, but planning for delays can alleviate the stress that these problems have on you and your life.
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