First Time Home Buyer Mistakes
First time home buyer mistakes are common amongst first, second and even third time buyers. The key is identifying common mistakes, grasping an understanding of why they are usually made and simply avoiding them. Educating yourself before you begin the home buying process will help you eliminate pitfalls and mistakes.
MISTAKE # 1:
The first time buyer doesn't ask enough questions of their lender and miss out on the best deal.
Make sure you take the time to research different types of mortgages for yourself. Try to familiarize yourself with certain terms such as adjustable, fixed, jumbo, interest only...which are all loan types. When it comes to choosing your mortgage or accepting the suggested mortgage that your lender offers...ASK QUESTIONS!
You can never ask too many questions of your lender. His/her answers will make you feel more comfortable and secure about proceeding. Purchasing a home is a BIG investment and should be handled as such. If you feel uncomfortable with any of the information that the lender provides and want a second opinion, then get one. It's advisable to shop around until you find the best mortgage product. Different lenders are able to do different things.
If you are a first time home buyer don't assume you have to accept the mortgage product offered. Be careful. The mortgage product you choose could cost you or save you thousands of dollars.
The first time buyer doesn't act quickly enough to make a decision and someone else buys the house.
A first time home buyer often times don't think about the competitive bidding involved in home shopping. Narrow your search down and concentrate on the house that you really like most...then make your offer.
Over analyzing, procrastinating and needing everyone's opinion before you make a move often causes you to miss out. Remember if the house is attractive to you, it's also attractive to another potential home buyer! If you love it...buy it!
MISTAKE # 3
The first time buyer doesn't find the right Real Estate Agent.
You need a Realtor that is willing to help you through the home buying process. You can save a lot of time, energy and gas if you work with a real estate agent. Realtors use a program called MLS (Multiple Listing Service) which allows them to find all the available homes in the areas you desire. Therefore, you will know the availability and relevant information (# of bedrooms, square footage, etc) about the home before making a trip to the property.
It's certainly fine to search for houses on your own also. You may be taking a Sunday drive and find a nice subdivision with a home you want to know more about. You can write down the address and call your Realtor to get all the facts. After your conversation with him/her you can decide if the property is worth your time to visit.
MISTAKE # 4
The first time buyer doesn't do enough to make their offer look good to the seller
Let’s consider earnest money. Earnest money is similar to a deposit. It shows "good faith" to the seller of the home you want to purchase. Earnest money is "NOT A REQUIREMENT" for most deals. However, it helps to display the seriousness of the buyer's intent to purchase the home.
If you are making an offer on a highly desired home and the seller is likely receiving multiple offers for their home, it would be wise to include earnest money with your offer. You can choose the amount of earnest money "good faith" that you want to include with your offer. Generally, it will be a range from $200 up to $5,000 depending on the sales price of the home.
Here is the GOOD NEWS...this earnest money is STILL YOUR MONEY! You are using "your" money as leverage to make your offer look better. If you put down earnest money and your offer is "accepted" by the seller you get that money back! However, you don't get it back as "cash in your hands," but it will be credited toward your closing costs amount.
For example: Your closing costs total $5000. You really want to purchase this particular home. Therefore, you tell your Realtor you want to put down $500.00 for earnest money. The seller accepts your offer! Your new closing costs amount is $4,500.00.
In close, earnest money is your money used by you to make your offer look "more" attractive to the seller. Suppose the seller has received 3 good offers, including yours and 2 others. Your offer is the only one that includes earnest money. Most likely, your offer will shine above the others, because of your serious intent to purchase the property.
This is not a guarantee, but a really good way to get ahead of the competition.
MISTAKE # 5
The first time buyer doesn't think about re-sale value before they buy.
The average first time home buyer only stays in a home for 3 to 4 years before they move on to purchase another home.This is VERY IMPORTANT! Please do extensive research about the area and location of your potential home before making the purchase.
Ask yourself: "Will I be able to sell the property for a profit? Or will you suffer a loss? Never consider purchasing a property where the re-sale value is questionable.
There are several reasons that first time home buyers upgrade. You may be starting or have a growing family, you may get a better paying job, or may have to re-locate. Always think of your first home as an investment to use for your next home. Be wise. Think ahead and you will be just fine!
As a first time home buyer, remember to ask questions, seek information, and learn from the experiences of others. Following up on these tasks will help you avoid first time home buyer mistakes!
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