POSTED BY Adam Jordan ON 20 Oct 2017
Don’t make these mistakes!
The rules of real estate are always changing. On the one hand, affordability is hovering at an all-time high, interest rates remain low, and there is a large number of homes to choose from.
The bad news? Lending practices are tighter and creative financing is, well, a little less creative due to strict regulations. Still, buyer power for those looking to purchase a home is incredible, and there are some great opportunities in this market. If you’re looking to get into a home soon, be sure you know the mistakes of those who came (and bought) before and how to avoid during them. Here are the top six:
Holding onto your home. Before you begin the home search process, sell the one you’re in. Chances are it’s going to take longer than you expect to find a buyer because of the current market conditions and stricter lending practices. The last thing you want is the added financial responsibility of carrying a second mortgage while you try to sell your current home.
Not addressing your credit score. Stand around the real estate water cooler and you’ll hear one thing: Credit markets and lending practices are tighter than ever. This means you must have an excellent credit score to secure financing at a low interest rate. You’re entitled to pull your credit score at no cost to you. Request yours, and then take the necessary steps to fix any lingering issues that could affect your ability to secure financing.
Skipping the pre-qualification and pre-approval processes. One of the biggest mistakes buyers make is not knowing how much they can afford. By getting pre-qualified AND pre-approved you walk into the home search journey knowing the exact amount of money you can spend. This narrows your search, lessening the time it takes to find a home that fits your individual needs, while giving you more time to spend in the homes that could potentially be yours. Pre-approval also gives you big buying power during the negotiating process since sellers can’t reject your offer based on unavailable financing. The bottom line: Once you have your credit in check, talk to your trusted lender to get pre-qualified AND pre-approved.
Not knowing when to stay and when to walk away. It’s worth repeating: buyers have more power than ever during the negotiating process. Don’t be afraid to make a low offer on the home. Don’t make the mistake of walking away because of a few thousand dollars. Think about it this way: a few thousand dollars could translate to less than $100 a month on your mortgage.
Not knowing the total costs involved. Some buyers, especially first-timers, aren’t entirely aware of the costs associated with buying a home. These include: closing costs, title insurance, and lawyer fees as well as ongoing costs such as property taxes, utilities, and yard maintenance. When you first begin shopping for a home, always ask your real estate agent and mortgage representative to provide you with an estimate of the additional closing costs so that you can work them into your budget.
Signing contracts with contingencies. This is a critical mistake that could end up costing you big bucks. For example, avoid signing any contracts that allow the seller to stay in the home for an extended period of time. Why? Depending on how long they stay, you run the risk of losing your expected interest rate. Or worse, the deal falls through the cracks and you’re back at square one. Bottom line: have your real estate agent review the contract and explain any and all contingencies so that you understand what you’re getting into.
The best way to avoid any and all of these big buyer mistakes is to work with a professional real estate agent. If you’re looking to buy in the near future, give us a call. We’ll walk you through every step of the home buying process so you have the most positive buying experience possible.