Home prices are falling, and now, more than ever todays buyer has to be well informed. With many foreclosures on the market, and even more to come in 2010 & 2012, it is giving buyers more negotiating power. Financing has become much more difficult, as the "easy loan days" are about over as more homeowners default on their mortgages. Today's buyer has to be cautious and conservative in buying a home they can afford while making a smart purchase. Here are 35 tips common mistakes Home buyers make.
Top Mistake #1 You took the loan the bank suggested.- One of the biggest mistakes most people make. Do your research. Chances are, the loan officer might be getting a bonus for pushing one loan over another. Shop around for your Loan. Bank mortgage packages change week to week. Keep in mind that shorter-term mortgages will cost more per month since you're paying off your loan faster. Monthly mortgage payments on a 15-year fixed loan typically run 25 percent higher than the 30-year option, said Keith Gumbinger, vice president at HSH Associates. Read the fine print, to be sure you can add extra money to the principle without being penalized. Do your research on prepayment penalties on mortgages.
Top Mistake 2 Assuming foreclosures are great deals- Our site is all about foreclosures, and sometimes they are not such great deals. The key is to do your homework, as every situation is different. Home values have slipped significantly, and you don't want to buy an auctioned house for a remaining balance that doesn't reflect market prices. If the house was purchased at the peak of the market, you will be buying a home over valued. Again, every situation is different, research will be your key weapon. In some cases you cannot have a walk though, or a home inspection. How great of a deal is it, if you have to spend another 100K in upgrades to make it pass the code requirements?
Top Mistake 3 Don't even think about buying another home before your current home is sold. Silly, silly, silly folks! You risk putting yourself in two foreclosure situations. Given today's market, there are numbers of discounted homes on the market as a result of home foreclosure that it makes selling even harder than ever. You can always rent while your belongings are in storage short term before buying your new home.
Top Mistake 4 You didn't include monthly savings in your budget. Experts say your total monthly debts, including your mortgage, should not exceed 36 percent of your income before taxes. Common mistakes are not writing in your retirement savings, entertainment, or your kids' education. People often do away with entertainment, which is an unrealistic mistake.
Top Mistake 5 You didn't include rising taxes. Have you checked the current GVT debt balance these days? It seems like people have forgotten the last (couple) bailouts and how they will effect us eventually. Big news folks, crap is going to hit the fan very soon. The Gvt can no longer stay a float, this confirmed with China who no longer wanting to buy our debt. The current Social Security system for the baby boomers has been spent, leaving 50% of the (78 million Baby Boomers) stranded, as they are relying on the GVT assistance which is no longer there. Remember if you are the younger generation, count on future taxes being high.
Top Mistake 6. You forgot to look into future plans- Way Too often we see college students or single women looking to buy 1 bedroom condo in a declining market. How misinformed can you be? It will not work out too well when kids are on the way, and you are trying to sell in a declining market. If you are not married, don't write it off that you will never get married, because chances are just two years down the road, you will be saying your vows, and loosing money on that condo. We are on a down trend, do your homework, ...........it is not the 90's anymore where you are making 50K in 2 years time on your property)
Top Mistake #7- You forgot to do an inspection- Big Woops! You should never buy a home without having it inspected. Have you ever run across termites? Underground heating oil storage tanks also should be inspected, and disclosed by the seller. Home inspections can run $300 to $600 and usually include a check of a home's heating and air condition systems, plumbing and electrical works, roof, walls, foundation/structure, drainage, the garage and basement. Double check termite, radon, asbestos, mold and lead inspections, as they typically are not included.
Top Mistake #8 Submitting a pre-qualification letter instead of a superior preapproval Letter- A preapproval letter will state that you have been submitted to underwriting and have been approved, where as a prequalification letter simply says the mortgage broker has received a loan application from the borrower. Be armed ready to go, having the bargaining power in your corner.
Top Mistake #9 Using the "low ball offer" as your only strategy. Be prepared with all the facts essential to negotiating the best possible deal, other than the regular "you just want the house for a lower price" type deal that everyone submits.
Top Mistake #10 Did you go back to the neighborhood at night? If you are spending primo bucks, be well informed of what that neighborhood looks like at all times of the day. You want to know as much about the neighborhood as possible before are committed to that purchase. Does the streets fill up with cars with no extra space at night? Does the street look a bit too dark for your liking?
Top Mistake #11 You didn't investigate the previous title holders. Title reports are free and identify past ownership issues of your property such as tax liens, undisclosed owners, easements, leases and such that could affect your ownership. ALSO it will give you very clear indication of real-estate flippers who jacked the prices up.
Top Mistake #12 Failing to understand the obligations set out in the "offer to purchase". Take time to read the contract. Don't let your real estate agent push you to hurry. Read though it carefully, and ask questions. Don't feel like you are stupid fool who doesn't understand. Often times contracts even have lawyers go cross eyed. Wrong assumptions, poorly written or missing clauses, and not understanding how the clauses affect the purchase, can lead to increased costs or a void contract, or loosing your deposit.
Top Mistake #13 Not checking into the builder's reputation. Talk to three or four people who live in the builder's homes and see what they have to say. Go knock on those doors. We thought our 10 yr condo would be in great condition when we moved in, only to know the electrical wiring and plumbing is bolted down properly,........ good thing we are just renting! If one particular builder built all the houses in a neighborhood, talk to the residents. It's also a great way to meet YOUR potential neighbors. (I am sure everyone has seen the movie Lakeview Terrace with Samuel L Jackson)
Top Mistake #14 Handing over a loan approval letter for more than your offer price. Let just reveal all of our cards, .....why not! Buyers will suddenly not want to knock any money off of the house, when you reveal that you "could" pay the amount they are asking.
Top Top Mistake #15 - Buying an appliance on your credit card after submitting your loan application. Purchasing anything large enough through your bank account that will change your loan application even to the slightest degree throwing off your credit ratios, will cause an underwriter to deny it. You could forfeit your earnest money deposit in addition to losing the home. DO NOT buy anything on credit or with a credit card once you have completed a loan application such as a car, washers or dryers, fridges, or lawn equipment, electronics or computers, or even furniture.
Top Mistake #16 Not Having your poker face on, when the sellers agent is around. Blowing your deal only takes but a few glances at your face to see if you fallen head over heals for a house.
Top Mistake #17 Forgetting to budget for property taxes- They should be factored into any home-buying budget.
Primo Top Mistake #18 NOT Knowing your credit report before buying a home. Get a free annual copy of your credit report as soon as you decide on buying a home. 80 percent of reports contain some type of error and 25% of those mistakes are serious enough to worsen your score, potentially disqualifying you for a competitive interest rate. It is essential to take advantage of an annual check up to eliminate any errors, as well as protect against identity theft.
Top Mistake #19 Picking the wrong town, or wrong area. Get school data online at homefair.com; you'll find test scores and college acceptance rates. Don’t buy a nice house on a not-so-nice block, or in a not so nice town. Buy with intentions that when you sell, you are dealing with all positives than negatives. Don't buy in a town that feels deserted. Go for a walk on the weekend, how does it look? What are the pitfalls, or opportunities for leisure activities?
Primo Top Mistake #20 You forgot to budget for closing costs. Woops. (We need 30,000 just to make this deal go through, dad) Closing costs can run you about 2 to 5 percent of the home's purchase price. Closing costs cover but not limit to origination (points) on a loan, escrow fees, title and homeowners insurance, legal costs, property taxes, fees to record your need deed and notary fees.
Top Mistake #21 What is the potential resale of this home? How well will that potential home do when you decide to sell it? Put yourself in the seat of perspective buyers down the road.
Top Mistake #22 You didn't investigate your real-estate agent. Will they pressure you after you have looked at dozens of homes? Go to the table with your research done, and don't let anyone walk all over you. Interview a couple references to see if the agent is a good match for you. There are excellent real estate agents that will bend over backwards for you, and not so good ones as well.
Top Mistake #23 Don't be afraid to make an offer that's well below the asking price. Have a couple of homes that you are considering to use as bargaining chips. This can push a seller to reconsider your offer because it may not be available tomorrow.
Top Mistake #24. You just bought the most expensive home on the block. Your neighbors lower home values will effect yours. While expensive upgrades may fair well, when it comes time to selling, it won't matter. Your selling price is dependant upon what is comparable in your neighborhood.
Top Mistake #25 Signing a contract with contingencies is a no-no. One common contingency mistake is when the sale is dependent on the seller finding a new home first. Tell the seller they can rent, or walk away from it. Don't even think about risking your interest rate or passing up other potential homes while waiting for someone you cannot even control to make up their minds. It be months down the road before they decide to close.
Top Mistake #26 You don't know if you are getting a deal on your home. Compare the cost of that potential home with similar homes in an area. You can do this easily on Google and confirm your findings with your realtor by their Comparable Market Analysis. Be sure you are educating yourself.
Primo Top Mistake #27- You saw no value in trying to increase your credit score before buying a home. Most people do not really realize how important their credit score is in determining what type of loan they will be slotted in. Too many times people think they will go out looking for a home three months before they have to move. Sure, that is possible, but don't expect to find the deals as you would by fully investigating the market by some hard digging. This type of person is a realtors dream. Great AND fast commission. Today's buyer doesn't take the time to investigate the market or foreclosures in their area. Most figure that today's market prices are good enough for them. Often times the buyer is so excited about making that purchase that they go out there and purchase without taking their time and rushing the process. Take advantage of checking it yearly for free, as well as knowing your FICO score in advance to shopping for a home. IF you really are a smart buyer you would improve your score 6 months before looking for a home.
Top Mistake #28- Forgetting the walk through all together. You do want to plan doing the final walk-through five days before closing, not the day before. This gives the homeowner time to fix anything with enough time to spare.
Primo Top Mistake #29-"I can always sell it down the road" Not in today's market. .......Nope, not in tomorrows market either. Consider your purchase ready for long term use. It is a big mistake buying a home with the fall back idea of selling it as your Plan B.
Top Mistake #30 - Buy a fixer-upper if you don't know how to fix it up. A small kitchen renovation can cost $25,000-$40,000. A bathroom renovation can cost $15,000-$25,000. Painting a house costs between $7,000-10,000. With all the fix ups, they add up.
Top Mistake #31- People do not consider planned communities and all the restrictions they hold.
Top Mistake #32- People also do not add the total obligation of what their home really costs them over the 30 year total debt payment of interest to their homes.
Top Mistake #33- An overlooked revenue source many people over look is the potential rental space on the property that can bring in extra income to pay off the mortgage. In a market where the employment rate is always down, these types of properties will be in higher demand. Possibly you can factor in an amount of renovation costs to create a set up as additional rental income.
Top Mistake # 34- It seems like anyone can afford a 300K home by today's bank standards, but can you really afford those monthly payments? Most people do not take the time to draw up a budget. Rarely do people draw up a plan for retirement savings, and investments. Most people will go off the amount of money the bank presents them to spend on a home. People always push the envelope of money they are allowed to spend, allowing NO room for emergencies. Give yourself PLENTY of financial room to move around. The biggest mistake is not allowing any room for social activities, because it will come out of the budget like it or not. Be realistic about your budget, and don't put yourself in a tight box.
Primo Top Mistake 28#- Disregarding the Condo Fees. People do not fully weigh in the added costs of condo fees. In some cases the condo fees are 25% of your mortgage payment.
Top Mistake #36???- Not Reviewing This List
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Glory To god for answering my prayers and continue to love me and my family……. Lord I know I’m not perfect and I thank you for continue to love me and grant me with the peace and love I needed around me…….. You gave me something no one else could ever give me…….. PEACE OF MIND……… Thank you Oh might God Thank you Jesus.