Before you jump in the car, take heed of the most common mistakes Buyers make:-
Please read this article about knowing your credit score. Why does it matter?
The lower your score, the higher your costs of borrowing. Fannie Mae and Freddie Mac, for example, charge higher up-front fees to borrowers with credit scores below 740.
For a buyer with a credit score between 680 and 700, the fee comes to 1.5% of the mortgage principal. On a $200,000 mortgage, that adds up to $3,000. Someone with a 740 score pays nothing.
Lower-score borrowers also get saddled with higher interest rates, about 0.4 percentage point more for the below 700 borrower. That costs an extra $62 a month — $744 a year — on a $200,000, 30-year, fixed rate loan
2. Not Getting Pre-qualified
Too many Buyers go out looking at properties before having spoken to a Lender. They kid themselves that they are ‘just looking’ and what happens is they then see the house of their dreams, have planned family Christmas’s and the color they are painting the downstairs bathroom to discover they cannot afford the house.
Speak to a Lender! Even if you are only mildly interested in Buying a home, it does no harm to see what your potentials are – you may have to change your timescales if you don’t get the answers you want. Need one?
3. Understanding what kind of Home you Really want
Be honest with yourself. Do you really want a Fixer Upper or does the thought of buying a place already done sound more appealing. How many beds do you really need? Be honest with yourself with your budget, area and size of house.A good website will give you an idea of house prices in a certain area and what you get for your money. Drive around neighborhoods and get a flavor of the type of architecture, lifestyle and location to work, hobbies etc. We all have different ideals, none of us are the same.
And if you are buying with a partner, please discuss before you go out looking on what you are both looking for. Being an agent in the middle of a cross fire of words because you want a work out room, and the other doesn’t, isn’t a great place to be. Try to be on the same page (or at least in the same book)
4. Buying large items whilst in the process of Buying a home
Once you are pre-qualified and ready to go, DO NOT buy anything major!!! Car, TV, furniture – you will be back to square one. WAIT until you have the keys to your house in your hand
A big purchase would use up a considerable proportion of a borrower’s total credit limit, which results in a drop in the score.
Faced with a large legal suit of over $100k, would you go into court and represent yourself? People think they are saving money by dealing direct with a Seller. Well perhaps? But what happens if something goes wrong? Do the parties have YOUR best interest at heart? Do you understand the contracts enough to get out of?
You want to work with someone who has your back and you enjoy working with. They will be your new best friend. And for the majority of times, IT’S FREE
6. Not budgeting for all the extras
You have saved up for your deposit, have got pre-qualified, found a house and you start buying bit n bobs for it. However, you are going to need a small float for the extras in home buying such as an appraisal, home inspection, survey etc. You also need to allow for extras on extras, for example if your inspection comes back with a higher than average radon reading.
DON’T SKIMP on these! They are there for a reason. Some aspects aren’t compulsory but it gives you the option to ‘get out of the deal’ if results aren’t normal. Better to be safe than buy a house and be faced with hefty costs to remedy a problem which could have been prevented before.
7. Not Keeping a calm head
Would you believe that (probably) the biggest purchase of your life just may come with a few headaches along the way! This is going to be a Roller Coaster ride. Your new BFF aka your Realtor ® should make it seem like everything is working out perfectly, but in the current market of funky financing, expect a few bumps before getting your keys. It will be worth it in the end!
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