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10 Ways to Avoid "Rookie" Mistakes
- Don't rush into the transaction. Buyers
searching for homes in tight markets may feel pressured to
make an immediate offer.
Solution: Become familiar with the local
market before making a purchase offer.
- Ask questions. First-time homebuyers,
by definition, simply don't have home buying experience. If
you don't know, ask. It may be uncomfortable, but let's face
it...a broker cannot answer an unasked question.
- There's no such thing as the "ideal" house.
Many buyers run themselves, not to mention their
brokers, ragged as they repeatedly dismiss homes that meet
most...but not all...of their requirements. A buyer who
turns down a house that meets most, but not all, of their
criteria may miss out on the best available property as well
as good financing, should market conditions change.
Solution: First-timers should definitely
view many different homes as possible before making an
offer. However, they should definitely not
make an offer on the first home they like...but also, and
more importantly, they should not hesitate to make an offer
when they find a home they love.
- Don't "Overbuy". Many First-timers are
routinely seduced into becoming "house poor". That is, they
spend so much for a home that they must forego annual
vacations, restaurant meals and other forms of
entertainment.
Solution: Get Pre-approved with a lender.
This can help determine a reasonable target price range and
also identify the mortgage programs which can work best for
you.
- Don't wait for that 20% down. It's an
admirable goal, but it's often years in the future for many
first-time buyers. Instead -- especially in markets with
rising values -- buy now with as little down as possible.
Consider VA, FHA and other loans with private mortgage
insurance (PMI).
- Be realistic. It's tough to ignore a
home's curb appeal, but what about practical matters? Is
there enough space? Is there off-street parking? Is the
construction solid in good shape? What about maintenance
costs? How far to work? It may seem like boring stuff...but
it's important none-the-less.
- Find out about zoning. Is the property
next door zoned for a 24-hour service station? Fire station?
Super Wal-Mart? Ask the broker about zoning for the property
and the surrounding area. Find out before you buy. Otherwise
you might be stuck with the home of your dreams...right next
door to the new landfill.
- Don't ignore representation. Chances
are good that the seller has a broker. Who's representing
you?
Solution: A buyer broker, an attorney, or
both can give you needed representation at the bargaining
table.
- Don't Skip an inspection. A
professional home inspection is simply a "must" whether you
are buying an existing home or a new one. Speak with
inspectors before you enter the marketplace to see how they
work, what they cost, and what they recommend.
- Don't under-estimate closing costs.
Closing costs comprise much of the expense when purchasing a
home. In many cases, the closing costs can be as much (if
not higher) than the down payment amount being required.
Solution: Examine your good faith estimate
provided by your lender. Talk to people who have recently
been through the buying process. Ask about fees you don't
understand. If some of the fees seem excessive, ask the
lender if they can be waived (or at least reduced). Many
lenders will work with you to secure your business. Just be
realistic. If you feel that the lender is "taking advantage"
of you, consult another lender.
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