Often times first time home buyers go into purchasing a home without fully thinking about the financial commitment they are about to get into. This report will help you avoid common pitfalls and make the most of your home purchase. We want your home to be a fulfillment of a dream, not a path to stress & frustration.
Don’t Look For A Home Before You're Pre-Approved For A Loan
This is one of the biggest mistakes first time home buyers make. Often time’s people search for a home based on a price they think they could qualify for. The problem is many times that number is way off from reality. Don’t be afraid to ask us what you can qualify for, even if you can’t qualify for a loan for the type of home you are looking for at least you’ll know and won’t waste your time. Also when a real estate agent knows you are a pre-approved buyer it gives you a big advantage since there are no guessing games. That way you have more leverage in negotiations.
Don’t Use Your Entire Life Savings For A Down Payment
This is another huge mistake first time home buyers make. While home ownership is a great financial move long term, there are costs associated with owning a home that surprise people that have never owned. From home upkeep to repairs, expenses can come fast and they're not always cheap. Don’t let the excitement of owning a new home put you in a bad financial situation. Life has a strange way of giving us surprises and the last thing you want is to be in a situation where you don’t have any money because everything went to into your down payment. Every situation is different, but it might be smarter to pay less on a down payment, and then have slightly higher monthly payments, rather than putting all available money in on a down payment.
Don’t Have The Seller Pay The Closing Costs
It’s not so much that you want to pay closing costs, as much as could you pay for closing costs? What does it say about your financial situation that having the seller pay for the closing costs is the only way you can purchase a home?
Use it as a test for yourself, because purchasing a home is a longer term commitment. Instead of having the seller pay for the closing costs try getting the seller pay your points, mortgage insurance or a home warranty. This will save you money on your monthly payments, not just make the initial purchase easier. Also, if the seller isn't paying your closing costs, you're able to get a lower price on a home.
Don’t Use Alternate Payment Methods On Closing Costs
If you will use your 401k, IRA, tax return or inheritance to pay for your closings cost think again. Just like in the reason above, if you need to use these alternate methods what does that say about your financial situation? A lot of these payment methods are designed to give your family financial security, so think twice. That said, if you have excess reserves to cover emergencies, repairs, etc, and your mortgage payment isn't much higher than you're used to paying in rent, then go for it!
Don’t Fall In Love In A Home (Before you own it)
Sometimes first time home buyers find a home and for some reason they just fall in love with it. It could be the neighborhood, it could be a pool in the yard or newly remodeled kitchen. This however could make them blind to other issues in the home. The important part is to remember when you are purchasing a home you buy the whole house, not just what you fell in love with. It’s important to take the emotion out of the process, and take a serious non biased view of every property you look at. There's a time you should fall in love with a home - after it's officially yours.
Don’t Jump Into Buying A Home Without A Professional
Many times 1st time home buyers get overly excited with purchasing a home and overlook important things. The home buying process is full of tiny details and fine print, so going in blindly can really cost you. We pride ourselves in giving you the best advice and make sure you are not walking into anything you don’t want. Also it is important to know the local housing trends. They change constantly and we have the relationship with the best real estate agents to make sure you get the best deal for your budget. Unless you're a seasoned investor and know the market AND the process, you'll need a great real estate agent, and we'll be happy to make a recommendation.
Buying a home is usually one of the biggest investments in anyone’s life, make sure you are well informed and work with a professional who can guide you in the right direction.
Questions about this report? Call us at 484.680.4852 or ask an expert here