Being a first-time homebuyer can be tricky business, as the show Property Virgins demonstrates every Tuesday night at 8 pm. It's an emotional process which anyone making such a large purchase needs to try to be ready for, but probably never will be ready for until they go through it. There are common mistakes that first-time home buyers often make that perhaps you can avoid if you're reading this.
1) Expecting Too Much for the Money - You cannot expect, unless you are wealthy, to purchase your dream home the first time you buy a house. It is likely you are just beginning so you'll purchase a starter home that's good enough and within your budget. This allows you to build equity so that later you can purchase a bigger and better home when you really need it.
2) Not Understanding Their Market - Each community has a different market climate. Some areas have houses which are languishing and staying on the market for months and even years. In others, they're being snapped up within hours of going on the market. Understand what it's like where you live.
3) Not Seeking Advice from a Mortgage Broker - A broker is separate from your real estate agent. You should go to them first before you even start the buying process. Let them check your credit and get you a preapproval letter, which you give to the real estate agent as assurance to them that you can actually buy a house. If there is a problem with your credit, a good broker will tell you what to do to fix it. If your credit is fine, they'll tell you what to do to keep it that way.
4) Not Using the Services of an Experienced Buyer's Agent - A buyer's agent is someone who works on your behalf to get you the best deal.
5) Not Understanding What They Can Really Afford - What the bank says you can afford and what you can really afford may be two different things. Aside from the cost of the mortgage, you should factor in the cost of private mortgage insurance (PMI), taxes, insurance, utilities and more. Your broker can provide a list of expenses that will be included in your monthly payments.
6) Not Working on Their Credit before Entering the Process - Before you even think about going to a broker to get preapproved, take some time to work on your credit. Don't purchase things on credit, pay down debt, and show that you can handle revolving credit. Don't be late on any payments, even your cell phone bill. Sock every penny you can into your savings account.
7) Thinking Bank Owned Properties Are Affordable - While it looks cool on HGTV to watch the flippers buy a bank owned property and flip it, it's not that easy.
8) Getting too Excited in Front of the Seller's Agent - When you go to open houses, don't act too excited if you do find your dream house. Take pictures if you're allowed, stay calm and be non-committal, then call your buyer's agent to help you with the deal.
9) Skipping Inspections - While inspections are an added expense, and money you can't get back even if the transaction goes south, they are very important. Usually the inspection process starts after you've made an offer on the house and can cost from $450-$500 or more depending on the size of the house and what you're having inspected.
If anyone else has had an inspection recently and the seller has a copy of it and is willing to let you see it, you can choose to use that one, but don't skip without knowing what you're getting into. A couple hundred down the tubes is a lot better than $200,000 down the tube.
10) Not Researching Neighborhoods - Before you even start calling your realtor, once you have your preapproval you should do some of your own legwork using sites like Trulia.com, Zillow.com and others to look at houses in the areas you want to live. This will help you avoid sticker shock, and Zillow.com even tells you what they think the house is worth compared to what other houses are selling for in the area.
Understanding the factors that go into play to purchase a house will help you avoid many first-time home buyer mistakes. The important thing is to keep your cool, not expect too much and when you are delivered your dream, don't show it. Stay calm, make your offer, and hold on for the ride.
Property Virgins - http://www.hgtv.com/hgtv48/videos/index.html