The Worst Buying Mistakes...
Buying a home is most likely one of the largest financial commitments you'll ever make. And if you don’t go about it the right way it can cost you dearly. Here are the most costly home buying mistakes:
Trying to find the market bottom
No doubt, the real estate market has been trending lower for a number of years now. As a result many home buyers are paralyzed because they fear they are paying to much and sellers are on the sidelines because many of them owe more on their homes then the home is worth.
Remember, buyers: Home prices are just one factor in how much a home will cost per month. The other much more important consideration is your mortgage rate and terms. They are slowly rising again, and that means higher monthly payments. In fact, even if home values fall, and we’re expecting them to drop another 5 percent this year, higher mortgage costs most likely will counteract that.
For example: Say a house was bought for $500,000 in January, and if you got a fixed-rate mortgage of 5 percent with no points and put 20 percent down, it would cost you about $2,150 a month. If you waited 12 months, when values are projected to be down about another 5 percent and mortgage rates are projected to reach 5.75 percent (per Freddie Mac), your payments would be $2,400.00 per month... or $250 more per month. Over a 30 year mortgage that adds up to $90,000 - much more then the $25,000 you may or may not have saved on the purchase price of that same house! Ahhaaa!
Not researching loan options
Unbelievable but true: Potential borrowers are spending twice as much time researching a car loan than they are a home loan even though homes cost an average of five times more! This can cost you tens of thousands of dollars over the long haul. That’s why it’s important to shop around for different loan options, rates and terms before you even start looking at your first property.
Buying more house than you can afford
In addition to getting pre-approved before you house hunt, know that as a general rule of thumb, the total cost of your mortgage payment (including any taxes and insurance) should not exceed 30 to 35 percent of your take-home pay. Going significantly above that threshold makes it very hard to make ends meet if something unexpected comes up.
Not paying attention to your credit score
Find out what your FICO score is and if it’s sub par - in the low 600s, for example - start a campaign to raise it, keeping in mind that even a 20 point increase could save you thousands of dollars over the life of your mortgage loan. The best interest rates and terms are reserved for those with a score of 720 or above.
Falling in love with the first house
Don’t fall in love with the very first house you see. If you do, you may overlook costly updates or repairs, skip or ignore an inspection, fail to factor in commute times, property taxes, the neighborhood, location and much more, all items that will determine affordability and resale value down the road. To ensure you are getting the best house at the best price, make enough time and shop around, comparing at least a handful of homes before you make a decision. And yes, sometimes the best choice ends up being the very first house you were shown.
Missing out on the right home
However, when you do find a home that fits almost all of your needs and especially your budget, don't let it slip away just because you may think you'll find an even more perfect fit down the road. While there are constantly new properties coming on the market you'll eventually pay more for the same thing (see point 1 of this essay)... and regret not buying earlier. Any really good agent will show you only homes that fit your requirements, and adjusts the selections, as you adjust your search criteria. But, he or she will always show you the best options first because he or she wants you to find your new home as fast as possible. It makes them look good and saves everyone time and money!
Trying to beat the seller
Everyone wants a bargain and you should always try to get the best possible deal... but haggling to the point where the seller is just closing the door on you, or another buyer steps in and takes it out under you, is not what you should be striving for. Unfortunately, many first time home buyers need to loose a couple of purchase negotiations before they eventually learn where to stop haggling.
Not listening to your buyer's agent advice
Good buyer's agents are worth their weight in gold! They will guide you through the entire purchase process... from the first meeting to the closing... and will always have only your best interest on their mind. They help people purchase homes on a daily basis and many of them have seen it all. Take your agent for all he or she knows, all od his or her experiences and skills - and keep in mind, he or she have bought and sold more homes then any of your friends, colleagues and family members combined!