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10 Mistakes Property Virgins Make

Posted by kim carpenter on February 22, 2010
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Purchasing a home is supposed to be a dream come true, but some buyer’s make mistakes that turn the occasion into a nightmare!

If you’re a property virgin about to take the plunge, here are some common blunders to avoid–and helpful tips that could save you money and frustration:

  • Not checking your credit report and score

Buyers will need a good credit score  to obtain the most favorable mortgage rates.  The cleaner your credit report and the higher your credit score  the more likely you are to be approved for a mortgage

Review your credit report a few months before you begin your house hunt, and you’ll have time to ensure the facts are correct and dispute mistakes before a mortgage lender checks your credit. You can access a free copy of your credit report at once every 12 months.

  • Not getting preapproved

After you’ve assessed your credit report, it’s time to set up an appointment with a qualified lender, like Cori Drudge of Fairway Mortgage Corp, to determine how much you can afford. First-time home buyers need to take the time to get an approval from their lender before looking at homes.  Getting preapproved can help you save time by looking for homes that you know you can afford instead of falling in love with a home and then finding out, you can’t afford it.

  • Not creating a long-term budget

If you have been watching the news, you understand that in the past mortgages were given to people who clearly did not have the means to pay them back. Don’t make this mistake, create a budget before you beginyour home search to determine just how much house they can really afford. A good rule of thumb is to devote no more than a third of your monthly household income to housing costs, which include mortgage principal, interest, taxes, and insurance.  There are many mortgage calculators to give you an idea but I always recommend talking to a qualified lender first.

  • Overlooking hidden costs

Don’t forget the cost of taxes, insurance, utilities, and fees. There are several hidden costs that first-time home buyers neglect to prepare for. They can be anything from the closing costs to appraisal fees, escrow fees, homeowner’s insurance fees, property taxes, and even moving costs. Cost of repairs and maintenance have to be considered also. You might consider asking the seller to pay for a 1 year home warranty that will cover some repairs and not breaking your budget.

  • Not using professional help

You need someone looking out for your best interest.  Sure, it’s possible to go out and buy a home without the aid of a professional real estate agent. But a good realtor can save you a lot of  time and frustration.  A realtor has access to all the homes on the market and those that are pending and sold.  They can give you a comparative anaylsis to determine the proper value of the home you are interested in, show you homes, assist you with inspections.  You want someone who has your best interest at heart, someone who will be by your side throughout the buying process and beyond.

  • Picking your real estate agent and lender blindly

Ask your friends, neighbors and family for recommendations.  You have to have a good relationship with your realtor and lender or the process will not go smoothly.  Don’t sign a buyer’s agency agreement until you feel comfortable working with that agent, you don’t want to be stuck.

  • Thinking you’ll get everything on your “wish list”

Create a need/want list with your agent before searching for homes.  Include items such as… area, school system, proximity to work, new kitchen, home office, this will narrow your search. You may realize there are certain parameters you really want or don’t want.  You have to be flexible, there is no such thing as a perfect home!  Your goal is to be able to afford everything you need–as well as some items you want–all while staying within your budget.

  • Getting emotionally attached to a home before you have it inspected

Before you start placing your furniture in the home, you need to bring in a home inspector to check the safety of your potential new home. Inspectors will evaluate the structure, construction, and mechanical systems of the home and will give you the approximate price of repairs that may be needed. They will examine everything from the electrical system, water heater, and HVAC system to the foundation and floors.

Your realtor may recommend inspectors but always do your own research.

  • Not researching your neighborhood

Always check out the school systems, crime statistics and activities in the area.

“Remember, you can change your house, but you can’t change the neighborhood.”

  • Not considering the resale value of your home

You just started the home-buying process but selling the home probably has not crossed your mind.  You may be planning to live in a home forever but life happens,…whether it is a job transfer or having another child or taking care of an incapacitated relative, circumstances change.

You want a home that will be easy to sell, while looking at homes to purchase, keep in mind what the typical home buyer is looking for.  Just because you don’t mind backing up to a busy street, doesn’t mean that they typical buyer won’t mind.

With the extension and expansion of the popular first-time home buyer tax credit, as well as price declines and historically low mortgage rates, an influx of qualified first-time buyers are rushing to take advantage of the market.  If you’re a property virgin do your research first!!!  Call an agent with experience in the area your are searching and start your home search now!

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