Buying a home may seem like a huge task, but a little preparation will ease the way. Be aware that buying a home comes with plenty of potential missteps. Here are 10 all-too-common mistakes first-time homebuyers make:
1. Not knowing how much house you can afford.
Many novice homebuyers spend a lot of time researching homes — comparing kitchen layouts and backyard square footage — but very little time researching their financing options. One of the first things buyers should do is talk to a qualified lender or broker and get pre-approved for a mortgage. Without first figuring out how much house you can afford, you risk falling in love with one you can't.
2. Assuming foreclosures are great deals.
Just because the previous owner owed $450,000 on a house before the bank took it over doesn’t mean it’s worth that much now. Values have slipped significantly. You may not be getting the bargain you think with a foreclosure. Also, most homes owned by lenders or banks have been sitting vacant for months and may have been vandalized. That could require extensive renovation or repair. Weigh the costs of fixing up the property against the savings you’ll likely reap by buying a lower-priced foreclosed home.
3. Letting your true feelings show.
No matter how much you've fallen in love with a house, don’t let the seller’s agent in on it. Otherwise, he will gain the upper hand in negotiations.
4. Failing to find a good buyer's agent.
Landing a mortgage is tough these days. So buyers should rely heavily on knowledgeable agents to help them get their finances in order. After all, buyer’s agents have a fiduciary responsibility to the buyer exclusively — and should be looking out for his best interests. Or consider using an agent recommended by a relative or friend. Interview the candidates about their experience; ask if they’ve worked with first-time buyers before and what kind of service you’ll get from them.
5. Underestimating the costs of owning a home.
Whether it’s a rusty pipe or a leaky roof, things go wrong and need to be fixed. Many homebuyers don't anticipate the additional costs for repair and maintenance, or for an increase in utility costs. Consider the age of your new home and how well it’s been treated by the previous owners in your budget. Be prepared to set aside a small percentage (1% at most) of the home’s purchase price annually for repairs and upkeep.
6. Failing to budget for property taxes.
Property taxes — and the likelihood that they’ll climb over the course of your time in the house — should be factored into any homebuying budget. To get an idea of how much you’ll be paying, call the local tax assessor’s office or talk to people in the neighborhood.
7. Assuming your first offer will get accepted.
As home prices get even more affordable, competition is bound to heat up. You can’t assume you’ll walk in there, make the offer and get it.. Try not to get discouraged if you lose out on the first — or second — house you make an offer on.
8. Skipping the inspection.
Before signing anything, hire a professional inspector. The seller isn’t likely to tell you there’s mold or the walls are poorly insulated. Buyers should hire their own inspector. You can find inspection companies in the phone book, or by doing a simple Web search with your ZIP code.
9. Doing too much too fast.
Some buyers want to make the house their own right away. They overextend themselves on credit to do so, and assume the improvement will pay for itself by increasing the home's value. But that’s not always the case. Instead, buyers need to exhibit patience and make changes over time.
10. Failing to include a contingency clause in the contract.
A mortgage financing contingency clause protects you if, say, you lose your job and the loan falls through or the appraisal price comes in over the purchase price. Should one of these events occur, the buyer gets back the money he used to secure the property. Without the clause, he can lose that money and still be obligated to buy the house.
Thinking of buying a home? Call JoAnn Young 321-243-4917 or email JoAnn@myFLdreamhome.com
