One of the great things to keep in mind is the fact that if you decide to purchase a home this year in 2009, even if you have already filed your taxes; you can file an amendment and still receive your $8,000 tax credit this year.
Falling prices, favorable interest rates, and government tax credits are creating a favorable atmosphere for people looking to buy a home. One report indicated that Juanuary home prices were almost 20% lower than a year ago, on average. But, buyers should educate themselves on the intricacies of buying as home before diving into the market and making some common mistakes that will plague them later on.
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Many first-time buyers go right into shopping and comparing homes, then find out when they try to get financing for the home they want, only to find that it's out of their grasp. Experts recommend obtaining pre-approval for a loan before shopping so that you know how much house you can afford.
Be wary of foreclosures. Although the San Diego real estate market seems to be on the rebound, make sure to do your homework. Just because somebody only owed $600,000 on a house that was valued at $675,000 when they bought it doesn't mean the home is worth that much now. Property values have dropped significantly in many areas, so foreclosures may not offer the best bargains. Also, some foreclosed properties have sat vacant for some time and could have been vandalized. These properties, while inexpensive to aquire, could end up costing a lot more after renovations and repairs.
Obtaining financing has gotten considerably more difficult recently so buyers should find a reliable buyer's agent to assist them. A good place to start your search for an agent is the National Association of Exclusive Buyer Agents. It is a not for profit organization that represents buyers. Another option is to use a buyer that someone you know who recently bought a home used, if they recommend them. Before hiring an agent, ask about their experience, particularly with first-time buyers, and what kind of service they provide.
Many new home owners make the mistake of not budgeting for maintenance costs and repairs. As a rule, things go wrong with houses and need to be fixed. Most experts recommend setting aside about 1% of a homes value annually for upkeep and maintenance.
Owners also forget about property taxes. First time owners have never had to deal with taxes because they've rented recently, so they can get a big surprise come tax-time. Also be aware that tax rates are likely to rise while you own your new home so consult local tax professionals to determine how much should be set aside for taxes.
Sometimes new homeowners are so excited to move into their first home, they skip the inspection. Very bad idea. The seller isn't likely to tell you about problems like mold, foundation issues, or insufficient insulation. After all, they want to sell the house. Buyers should hire their own inspector, not one appointed by the agent, to avoid potential conflict of interest. Inspection companies can be easily found in the phone book or on the web.
Finally, and perhaps most importantly, try to get a contingency clause added into any contract before you sign it. It can protect you if you are laid off or the home is appraised for less than you paid. With a contingency clause in place, you may be able to get your money back; without one, you will still be obligated to buy the home and may lose a substantial amount in the process.
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