Smart home buyers are realizing this may be the best time to buy before mortgage interest rates go higher, and sales prices increase in the spring. However, in the quest to purchase a house or condo, many home buyers get caught up in the thrill of acquiring a new home and they make potentially costly mistakes.
Here are the top home buyer mistakes to AVOID during any time of the year:
1. BUY A HOME WITHOUT YOUR OWN BUYER'S AGENT. Too many home buyers purchase with only the help of the seller's Listing Agent, who is only looking out for the Seller's best interests. As your Buyer's Agent, it costs you nothing to use my services to represent your best interests in the purchase. After all, buying a home is a BIG decision and a BIG FINANCIAL STEP.
As Your Buyer's Agent, I can show you any home that is on the market, whether it's listed on the MLS, on the Internet, advertised in a local newspaper, or the home simply has a sign posted in the front yard. Sellers who aren't represented by a 'Listing Agent' will usually cooperate with a Buyer's Agent and pay half of a normal sales commission.
2. SHOP FOR A HOME BEFORE YOU SHOP FOR A MORTGAGE. It's normal for prospective home buyers to get excited about buying a home. According to the National Association of Realtors, more than 70 percent of today's home buyers start their home search on the Internet, and start looking at homes on their own before they have been pre-qualified or pre-approved for a mortgage.
But that's the wrong place to start when buying a home. The first step to a successful home purchase is for buyers to check their FICO (Fair, Isaac Corp.) credit scores to be certain a mortgage can be obtained.
Although you can now obtain your free credit reports from all three major companies at www.AnnualCreditReport.com, or 877-322-8228, those reports are virtually worthless because they don't include FICO scores, which all major mortgage lenders now use. The best spot on the Internet to check your credit scores is www.myfico.com. It costs about $45 to review all three credit reports there from the three national credit bureaus, Equifax, Trans Union and Experian. The scores may vary among each of the three credit bureaus. By checking credit reports at all three bureaus, there is time to correct any errors (reportedly, about 33 percent of credit reports contain mistakes) before applying for a mortgage. Armed with your credit reports and FICO scores (anything above 700 practically assures you will get the lowest mortgage interest rate), it's time to shop for written mortgage pre-approval.
As a Loan Specialist with Utopia Mortgage, I work with over 80 wholesale lenders to find you the best mortgage rates and terms to meet your needs. I'll provide you with pre-qualification, which advises you approximately how much you'll qualify for on your loan; and upon lender pre-approval, the lender will provide a 'pre-approval' letter to attach to your purchase offer.
3. RUSH TO BUY A HOUSE OR CONDO WITHOUT CAREFULLY RESEARCHING THE LOCAL MARKET. Research the local home market in your price range. Although you might buy the first home you spot on the Internet, or at a weekend open house, that rarely happens.
4. BUY A HOME WITH AN INCURABLE DEFECT. No house or condo is perfect. Each one has some defect. Even brand-new houses have problems (hopefully not significant). Fortunately, most houses and condos don't have defects that are not tolerable. Serious problems, called "economic obsolescence" by appraisers, might include a bad floor plan, poor location (such as near high-voltage power lines or adjacent to the city dump), heavy street traffic, and lack of convenient parking. |