The real estate market is hot! Affordable housing is hard to find, and buyers are desperate. Many are paying outrageous money for simple, modest-sized homes that they would not have considered a few years ago. But it's understandable. In many instances, they're buying what they can!
Indeed! Along with the hot home-buying market comes heavy competition, and many are making all-cash offers. But, if you aren’t familiar with all the complexities of purchasing a home, you may have future financial regrets. There are five top mistakes that first-time homebuyers often make.
Although purchasing a home is often the best financial decision you could make, it doesn’t work for everyone. For example, if you know you’ll only be in the home for a couple of years, buying may not make sense after you amortize the closing costs.
Homeowner’s insurance, maintenance or HOA (Home Owner’s Association) fees, and closing costs may consume your savings and leave you with no emergency funds.
A home inspection is no way to cut home costs. The defects a home inspector may find far outweighs the price of a home inspector, and you may save thousands of dollars on future repairs.
Many home buyers think that if they dump their life savings into a home and keep it for a few years, they’ll get a significant property. While home equity is nice, the home is one of those assets that aren’t very liquid if you need money fast.
A lender considers this ratio when looking at your ability to pay for a home. If you’ve accrued too much debt, you may not be approved. Show a history of saving – not getting into debt before you apply for a home mortgage.
If you’re a first-time or novice home buyer, it’s imperative that you spend some time with an expert, such as a trusted realtor, before rushing into the home-buying experience. They keep up with changes in current market values and how the various mortgage companies do business.
A realtor can also give you a reality check on home prices and values. Today, many home buyers rely almost exclusively on online sites such as Zillow or Trulia when shopping for a new home and may get a false sense of the true values of homes in the area. It pays to consult with a real estate agent.
Keep a close eye on your credit score before applying with a lender. You're not guaranteed the loan even if you have a pre-approval letter. If your score changes significantly, you may find that you don’t qualify just before closing. Don’t let that happen!
Always pay your bills on time, and don’t incur more debt by purchasing a new car or opening credit cards. Switching jobs may also be a red flag for a lender, so don’t consider that move until after you close and the house is yours.
That's it for now. Happy House Hunting... and may you find the home of your dreams!