Mistake #1: Not Understanding What You NEED And What You WANT. Prioritize your basic needs before you even start looking so you don’t buy the wrong home. Also know that you may have to compromise. This is your first home, not the dream home you’ll live in for the rest of your life. The home you can afford may need a little work (fresh paint, new carpeting). Over time, you may be able to hire a contractor or do some more substantial upgrades yourself. With that mind, consider these items: 1. General price range 2. Approximate size (in sq. footage) 3. General location or area 4. Number of bedrooms 5. Number of bathrooms 6. Style and layout of home 7. School requirements or districts
Mistake #2: Not Knowing What You Can Afford Before Looking At Homes. You’ll waste your time looking at properties that are may be out of your price range. Examine your budget, get a copy of your credit report and credit score, then sit down with a qualified lender to determine how much of a home loan you can afford. Don’t assume the first lender you ask is giving you the most competitive rate. Talk to more than one lender (ask your REALTOR for recommendations) to comparison shop for a mortgage.
Mistake #3: Not Getting Pre-Approved Before You Go House Hunting.
A lender can give you a pre-qualification letter after a simple 10-minute phone interview. But a pre-APPROVAL letter is a firm commitment to lend money based on VERIFICATION of income in the form of: employment, funds on deposit, and your credit history. All that remains is the property appraisal for you to get a home loan once you’ve been pre-approved. Why is this so important? Pre-approval is a powerful weapon when it comes to negotiating the price you want, so it’s worth it even if it takes a few days to a few weeks. It tells the sellers you are serious and they may accept your offer even it’s less than someone else’s because they know you can get financing. On the flip side, without pre-approval, you may put an offer on a home but the seller goes with someone else.
Mistake #4: Neglecting To Consider The Overall Costs Of Owning A Home. There’s more to it than the monthly mortgage payment. You have to plan for homeowners’ insurance, property taxes, utility costs, plus repairs and maintenance. If you’re buying a condo/town-home/patio home, you’ll have to pay monthly maintenance costs known as Association Fees.
Mistake #5: Not Having A Home Inspection. Having a professional home inspection as part of your offer is one of the most important parts of the process. Review the inspection report carefully to make sure the home is in good condition. You don’t want to buy a home that has serious issues, such as: mold, water damage, or pests.
Guests post by Skip Halverson. Skip is an experienced and successful realtor with RE/MAX RESULTS. You can contact Skip at www.skiphalverson.com.