Worst First Time Home Buyer Mistakes
1. Not Knowing what You can Afford!
What the Bank says you can afford, and what you will be comfortable with as a payment, might not be one and the same. It's prudent to review your past spending habits and fit their number in your equation, and then re-look at your Comfort level. Look at your monthly expenses, ie student loans, car loans, what you normally put on your credit card, groceries, health insurance, saving and so on, then add in your housing expense. Years ago, the qualifications were set at 1/4 of your income as housing. Today, with costs of homes, most lenders will easily approve you for 30%.
Why you should not look at homes outside your price range? You'll make a poor end decision stretching and that could be a huge mistake!
2. Don't skip the mortgage qualification step!
Be pre-approved is the mantra for 2009 and 2010. The Banks are looking at the stability of your income, past history on your credit as well as your credit score. Knowing what the Bank will give you is an excellent ball park, but don't neglect step 1 for your own realization of your affordability. This way you don't waste your time dreaming of what could be yours if your score was better, your debts less or your income more. Sometimes between step 1 and step 2, you may find that waiting a year to pay off the debt or wait for the anticipated raise from your employer makes sense.
3. Failing to consider additional expenses.
Home ownership involves additional expenses of top of your Monthly payment. When you are a renter, you may have had heat and water included. Now, those are yours to pay. Home ownership involves repairs, or updates that you can't live without and may require budgeting for those expenses.
Condo ownership involves an association fee, which could include expenses for maintenance on the exterior but not in your individual unit. Condo owners pull their monthly fees for the board to determine what maintenance will occur on the outside that was promised, ie landscaping, roofs, gutters, tuckpointing, driveway maintenance, painting trim.
4. Being too picky
Yes it's a buyers market, and values in the market appear to be a great deal. Currently you are getting more for your money than ever before, however that doesn't mean you don't have to compromise on your wish list. Best to prioritize what is more important...the updated bath or a second bath is an example. You may have to forgo that extra bedroom, live on a busier street or accept some outdated decor to get the home to meet your budget.
5. Lacking vision
Okay, so the wallpaper is ugly, but to strip the wallpaper, repair the wall and sand, have the wall repainted, takes time and money. The carpet is worn but under the carpet, maybe worn out hardwood flooring that needs to be refinished and stained. These are decorating items that you can budget for later, if the home fits your other needs. Try to look in your crystal ball if the space will fit you 5 years from now. National average before the great recession was 7 years in a home before changing it. I think the time might have changed a bit, but I also know things change in life and we either adapt our space or we need to either downsize or up size our property to meet our lifestyle now. The person with bad knees or a bad hip, probably should anticipate that stairs may not be in their future, where it would be fine for now.
6. Being Swept away.
I'll never forget a buyer just was so engrossed with the sellers furniture, that I had to reminder her that the furniture was not part of the sale. Her couch would replace the fine leather we were looking at. Her bedroom set rather than the sellers gorgeous Thomasville. Instead look at the space, and what potential you have to improve it.
7. Compromising on the important things.
Don't get a 2 bedroom if you are planning to have kids and will want 3 bedrooms. If you hate sharing walls with someone, don't buy a place that shares walls. You currently have a long corridor to your condo and you hate passing all the units, well, get a smaller building condo.
8. Inspect and re-inspect your decision.
Have a professional inspection and test for radon. You should know upfront what is wearing out or at the end of it's life but still working. Roof 10 years old? Well you should budget for another roof in 9 years. Makes sense? Keep your feelings in check until you have the full picture of the house's physical condition and the soundness of your potential investment. Talk to your trusted advisers if you are questioning your ultimate decision. There have been times when I have seen the inspection and suggested it maybe better for them to walk away now rather than have a money pit.
9. Hire a Buyer's Agent
Don't you think it makes sense to have your own trusted advisor? The seller's agent is trying to sell the house and has his interests in sight, not yours. Real Estate agents or Realtors are held to an ethical rule that they must act in both the sellers and buyers best interest, but the benefit of a true buyer's agent is that she/he will also remind you of your wants when you are thinking of compromising your wish list. They remind you of step 7.
10. Think about the future
No one can predict perfectly the future of your chosen neighborhood, but paying attention to the information that is available may help to avoid unpleasant surprises. Is there vacant property behind your home? What can be there? A home or a commercial endeavor? Is a highway expected in that strip of land adjacent to the property? What are the zoning plans in the area?
Buying a home can seem stressful and overwhelming, but you can shop in confidence with experienced team members. Your agent, your lawyer, your inspector-all are part of your adviser's. This is probably the largest purchase you will make, but it shouldn't be the most difficult. Interest rates are at an all time low, the affordability of homes is back at 2000 levels, this might be the best time to consider an investment strategy, but look at your budget, your future and you decide to stretch or not to stretch.
.JPG)
See my listing at 710 W. Cathy, Mt Prospect to see what an updated and remodeled ranch looks like. From the windows to the baseboards, the hardwood flooring in the cherrywood cabinets to the granite island this home speaks to the gourmet cook, or casual entertainer. Turn key listing with full basement with recreation room and spa shower bath. 2 1/2 car garage with new roof, brick paver patio for outside entertaining. This home feels social in so many ways!
TAX INCREASE #1 – 20 PERCENT CAPITAL GAIN TAX IN 2011
I was searching out some reputable lenders for a buyer client of mine, and I found that interest rates are at 4.125-4.5% as an average with no points added for a 30 year fixed mortgage with 20% down. My client has excellent credit scores and they were told they could lock in at the 4.125%. This is what we found out basing the extra's on 3000.00 for taxes and 700.00 for homeowners costs:
