As seen in the Seacoast Scene
July 3, 2007
Common Home Buying Mistakes Last week I spoke about common mistakes made by sellers, so I'm going to stay in that mode this week and talk about common buying mistakes, and how to avoid them. It's a great time to be buying- there are a lot of properties from which to choose, prices have settled a bit, and interest rates are still very low. The seacoast is a wonderful place to live and vacation, so please pay heed and go into the process with eyes wide open. I've seen a variety of problems arise from not getting the home you wanted so badly to paying too much to not being able to close, so pay attention, and together we can make sure you have a successful, positive buying experience, whether you're looking to buy primary or vacation property. Even smart people make these critical mistakes!
Mistake #1: Letting Emotion or Asking Price Dictate Your Offer Many buyers fall in love with a home and overpay, and conversely some are so focused on getting a "deal" that they lose focus on what should be the driving criteria for making an offer: market value. Buyers should have a very good idea of what comparable properties have recently sold for, and start their offer process using solid data.
Mistake #2: Making Major Purchases or Changing Jobs When you determine you're in the market for buying property, get frugal! Every major purchase you make will affect your credit score, and this can affect your buying power, your ability to get a loan at all, and it can mean the difference in the interest rate you get, costing thousands of dollars over the life of your mortgage. I've seen people so pleased to be under agreement on a new home that they go out and buy new furniture and a snazzy pickup truck only to find out at the last minute that their actions caused the home purchase to fall through! If you're thinking of changing jobs, make sure it's a salaried position in the same industry you're currently in- if it's a commission based job, in a different field, or if you're thinking of being self employed- DON'T DO IT NOW!
Mistake #3: Not Getting A Professional Inspection Even if the home looks perfect, there are things lurking beneath that could affect the livability and resale of your new home- and it could cost you dearly in the long run. Be sure to have an ASHI certified Home Inspector perform a thorough inspection to protect your interests.
Mistake #4: Not understanding Your Financing Fees, points, early payoff penalties are all things that can give you unwelcome surprises at the closing table. Make sure your lender prepares a good faith estimate and clearly explain any fees or penalties.
Mistake #5: Overbuying There is nothing worse than the feeling that you are a slave to your mortgage payment, or worse yet can't meet your financial obligations due to spending every dime the mortgage company would loan you on a new home. Be sure to prepare a complete budget including allocations for unexpected expenses, home repairs and savings. Stay away from the lure of adjustable rates, 100% financing or interest only mortgages unless you fully understand the ramifications.
Mistake #6: Not Considering Resale The house seems perfect for you and your family, but statistically you won't own it longer then 5 years, so be sure to consider function and location before you buy. If it has too many "unique" features that you fell in love with, it could severely limit the market you'll be selling to in the future. They say there's a buyer for every home, but try to put yourself in the shoes of the seller before you make a costly mistake- you don't want to be searching for the one buyer that shares your love of the pirate-themed living room, you want a wide range of buyers fighting over your home! As I heard long ago- begin with the end in mind.
Mistake #7: Not Using A Realtor This item may seem more than just a bit self serving, but a good, experienced Realtor will help guide you through the pitfalls and make sure you have all the information to make your home buying experience as stress free and financially beneficial as possible. You don't go to court without a lawyer, don't buy a home without the assistance of a professional. Now get out there and enjoy the holiday week! Wouldn't it be great to live here? You'd feel like you're on vacation all the time! It's a wonderful lifestyle at the seacoast...
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