Many first time homeowners know that buying a house is a complicated transaction. There are so many different factors that are involved which make the whole prospect intimidating. Even if you’ve done your homework, mistakes are unavoidable.
Luckily, knowing what to expect can make your more vigilant and careful. While you might not avoid the mistake completely, at least you will know what to look out for so that you can minimize damage to the transaction. Below are top first time home buyer mistakes that you need to know about:
Buying your first house is very exciting. Finally after years of dreaming and saving, you finally found your dream home and you’re thinking about buying it. Mortgage, financing and real estate terms can sound very confusing for first timers so it is quite understandable to be confused when you’re lender says you’re pre-qualified but not pre-approved.
Home financing has many different steps. One of the first few is getting pre-qualified. During the pre-qualification process you supply your lender a picture of your overall financial picture. During this stage they will require you to submit documentation on your debt, assets and income. The lender will then evaluate the data so that they can give you an idea on the amount of mortgage you can pre-qualify.
Pre-approval is one step higher. During this time you will complete an application for mortgage and (usually) pay an application fee. You will also be asked by the lender to submit necessary documentation so that they can conduct a more thorough check on your background and credit. During pre-approval your lender will give you a conditional commitment in writing and they will tell you the amount for which you have been approved. You might also be able to lock in a specific interest rate at this point. Getting pre-approved means that you can look for homes at or below the price level and gives you advantage when dealing with sellers or realtors because they know you are on your way to getting approval from the lender.
We all want to pay the lowest price for anything we want to have, including houses and property. Therefore, when you see a house you like, it is natural that you would want to offer a lower price compared to the list price. This is a good strategy especially if the house is overpriced compared to other same sized properties in the area or if it’s a buyer’s market and there are a lot of homes available for sale.
However, in a seller’s market many buyers think that they don’t need to step up. In this type of market there is usually a shortage of inventory and competition is generally more. If you really want the house, better make a great opening offer to get noticed by the seller.
It is normal for home buyers to think that the price of the home is the only cost they incur once they purchase it. However, there are still closing costs that you need to cover. Closing costs are the fees you pay when the title of the property is conveyed to your name. According to Zillow, closing costs are usually between 2-5% of the purchase price. They also report that buyers pay an average of $3,700 in closing fees.
Home ownership is very different to the renting lifestyle. For instance, home ownership means that you will be responsible for repairs and maintenance of your home. This means that you have to cough up your own money if the roof leaks or if the A/C goes out.
Not having money set aside for these types of emergencies can really hurt you financially. Changing your spending habits so that you can save more money not only to pay for home emergencies can help you become a better homeowner.
There are many self-help books and courses that specialize in buying a home for the first time. These types of resources can help you become a better buyer and decision maker. However, no book or course can help you prepare for everything which is why you need to work with qualified professionals who can help make the transaction flow more easily and make the experience less stressful.
Start by hiring a qualified real estate agent. They can also help you get in touch with lawyers, title companies and insurance companies that can help make your dream a reality. Since these people are professionals they will be able to advise you so that you can make the best real estate and financial decision regarding your purchase.
House buying is exciting and full of complexities. It is also one of the biggest financial transactions you will ever make in your life. Since it is very important, avoiding mistakes is very crucial. Poor decisions and bad choices can sour the experience for you or even put you in a bad spot financially. Doing proper research and preparation as well as working with licensed professionals can help you avoid costly first time home buyer mistakes.
Planning to buy or sell a house? Call Gold Path Real Estate at 612-758-0071 to discuss your specific real estate needs today.