1. Not checking your credit report and score
You’ve clicked through hundreds of online listings, compared floor plans and square footage, and are eager to jump-start your search. But before you even think of setting foot in an open house, make sure you get a copy of your credit report. The cleaner your credit report and the higher your credit score, the more likely you are to be preapproved for a mortgage at a low interest rate.
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 annualcreditreport.com once every 12 months.
2. Not getting preapproved
After you’ve assessed your credit report, it’s time to establish with a qualified lender 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 lusting after something out of your price range. And it will put you in a better position over another bidder with no preapproval.
3. Not creating a long-term budget
Home buyers should create a budget before beginning their search to determine just how much house they can really afford (regardless of what you are Preapproved for). 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 several work sheets available online to help you figure out how your income, debts, and expenses affect what you can afford each month for the next 15 or 30 years. Please email or tweet me if you wish for one.
4. Forgetting about the hidden costs
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. Another factor is the cost of repairs and maintenance. When you’re renting and the furnace goes out, what do you do? You call the landlord. When you own a house, you have to fix it yourself. You may find there are numerous “nickel and dime” things to account for that could add up to a significant chunk of money over time. Think.. your first used car….Plan accordingly.
5. Not using professional help
Sure, it’s possible to go out and buy a home without the aid of a professional real estate agent. But think about how much time and stress a good agent can save you. For starters, Realtors have access to all the homes on the market through the multiple listing service, or MLS, plus all the ones that are under contract and have been sold. A specialist (like me) has time to sift through all of these listings, says Boss, and make the appointments to show you the houses, create comparative market analyses to determine proper pricing, and meet with necessary inspectors. It is like having a family member that has bought and sold many, many homes and is willing to walk you through the process step by step. I have to admit I get the most satisfaction from 1st time home buyers and their joy in purchasing the house they never thought they would own.
6. Picking your real estate agent and lender blindly
Sometimes people make the mistake of finding a Realtor they aren’t comfortable with. Ask relatives, friends, neighbors, and coworkers for referrals. BY the way I am NEVER to busy for your referrals!!
First-time home buyers, are generally more time-consuming than the average buyer and require more attention. A good real estate agent will be friendly and accommodating, show only homes that fit your parameters, and help you with strategies during the bidding process—but never pressure you into something you’re not comfortable with. It’s important that the Realtor be experienced with first-time buyers, understand their wants and needs, and be able to connect with them well.
7. Thinking you’ll get everything on your “wish list”
BIG ONE !!! Another mistake people make is being too close-minded while searching for their home. He suggests sitting down with your real estate broker before searching for a home and creating a need/want list. Some of the items you might want to include as “must haves” or deal breakers are the towns you’d want to live in, square footage, or accessibility to transportation. The second part of the list would be things you don’t necessarily need but wish to have, such as a garage, new kitchen appliances, or an extra room for an office. Understanding that a certain amount of flexibility is essential. You want to be able to afford everything you need—as well as some items you want, remember it is a negotiation between TWO parties that have to meet at common ground.
8. Not keeping your feelings in check before hiring a home inspector
You’ve already chosen the perfect paint color to match your living room set. But hold on: Before you start picking out accent pillows for your sofa, 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. Buyers should find and hire their own inspector—independent of the real estate broker—to ensure there isn’t a conflict of interest. When you make your offer, make sure the seller is aware that your offer is contingent on the house passing inspection. You can also add a clause to the contract stating that the seller will pay up to a certain amount for any repairs required as a result of the inspection. NOTE: Also understand that I personally have NEVER seen a Home Inspection that has not found any “issues” whether small or big in a house whether older or new construction. Be REASONABLE.
9. Not researching your neighborhood
You may be living in your dream home, but your neighborhood’s a nightmare. Or you may have children or are planning to have children in the near future, but you didn’t consider the quality of the school districts or parks in the vicinity. You should ask yourself a number of questions during your home search, such as “Are there good schools nearby?” and “Do I feel safe coming home at night?” If schools are an important factor, you should go check them out personally. To learn more about the community, open up the local newspaper.
10. Not considering the resale value of your home
This one has moved down in my view solely because as homes are so undervalued most recently, there is no doubt that most homes will appreciate adequately when the market turns. If you plan to stay in your home for the next 3 years or so, you should see appreciation. One thing you can do to increase and add to the value of your new home is to take care not to OVER PERSONALIZE your home, thus narrowing the type of buyer that would be interested, minimizing the overall value of the property.
Falling in love with the first house you see: It can be easy to get caught up in the excitement and think you have found your dream house. Still, if you don’t look around first and explore all your options, you may regret it.
Misunderstanding the realities of home ownership: With home-ownership comes responsibility. Not only will you have to foot the cost of repairs yourself, but you will also be responsible for landscaping, lawn mowing, gardening and all the other things apartment-dwellers don’t have to worry about. Furthermore, you can’t just pick up and move when you have a house.