Questions You Should Ask Any Agent Part 6

What are some mistakes that you think people make when buying their first home in the Treasure Valley (and beyond :-)?

I think that three of the biggest mistakes people make when buying their first home include choosing the wrong lender, biting off more than they can chew, (sometimes those two go hand in hand) and spending money or buying on credit prior to closing on the home.

Getting financing for a new home is a big deal. And, it's not something people do every day so there is a lot to it that may not be easy to understand or that people don't even think about. First, it is in my opinion, VERY important to work with a local lender. Not only are there certain out of state lenders that aren't even licensed to loan in the Boise Idaho area, but they don't know what is customary in our area (ie. taxes, what closing costs are paid by whom, common time frames, required (or not required) inspections etc. etc.), they won't be familiar with local loan programs that are available to home buyers here, and you can't walk into their office face to face to talk to them in the event things are going awry. I can tell stories about problematic closings with out of state lenders and give more examples of the cons of using them and pros of using local lenders.  There are several good lenders to choose from, one that I like is Kellie Allen with Guild mortgage.  www.guildmortgage.net/kellieallen

Second, biting off more than they can chew; I am mostly referring to buying more house than they can afford or maybe should be buying for their situation. Just because you are "approved" for a certain amount doesn't necessarily mean that it is what you are or should be comfortable with. Also first time buyers sometimes don't take into consideration things such as utility bills, cost of home improvement and general home maintenance, cost for commuting (gas, car wear and tear, etc.) and other things that may be additional costs that you might not have renting versus buying, or just simply may not have thought of within the new budget that comes with owning a home. I'm not a financial planner, but do want to make sure that all things considered, buyers are comfortable with the situation that they are getting themselves into being a homeowner for the first time.

Finally, spending money or buying on credit prior to closing - it is very common when buyer's contract on their first home to get excited, go shopping for furniture, appliances & large household items. The problem with that is that your approval is based upon the snapshot of your credit and finances when you took application for the loan. What people don't realize is that the lender verifies that information prior to closing. If your debt to income ratio has changed because you've put that new washer/dryer & refrigerator on your credit card, you may no longer qualify for the loan that you were approved for. Or, if you were approved in part for the amount of money you have in your savings account (some loans require there to be a certain amount of money to show that you can make your payments for so many months) and that cushion is gone, so might your approval be. It seems innocent enough (though I've heard of people even doing things like buying new cars in the midst of home buying) but any change in your finances between loan application to your loan funding and the home recording into your name could cause last minute problems with financing and a buyer ending up being unable to purchase the home at all.