Buying a Home for the First Time
Before buying a home, you should take your time to find out as much as possible about the buying process and the property you are about to buy. Here are six common mistakes home buyers make:
1. Committing to a property before getting a pre-approved loan from the lender
This is a common mistake made by most people who are looking forward to owning their homes. Ideally, they search for houses for sale, and after being attracted to a particular house due to its features, location and maybe design end up committing to buy it without even knowing the mortgage they are entitled to. You should first know the amount you can raise before getting into a deal which will strain you in the end.
Letting emotions affect your decision could be disastrous because you will end up making wrong choices. You should search for a house when you know how much you can raise and how much you can get from lenders. In most cases, potential home buyers’ emotions trigger after seeing a model home. Ideally, a model home is well decorated and is perfect making the buyer think that his or her real home will be similar without even considering other factors such as location and monthly payments for the house. As a home buyer, you should first get a reputable money lender (a bank, a builder/developer or a credit union) before you commit to property.
2. Failing to get good faith estimates
As per Faith estimates mandated by federal government’s Truth in Lending Act, mortgage lenders should provide good faith estimates to buyers within three days of presenting a loan. Failure to get good faith estimates could make you pay more for a house or a loan.
The faith estimate document presented breaks down the loan into its constituent components with the buyer’s annual percentage rate (APR) presented at the bottom of the contract. The APR is very important because a home buyer can know what a loan costs including even the closing fees. Ideally, this is how home buyers can be able to compare loans from different lenders and get the best deals when buying a house. Having good faith estimates helps home buyers to:
• Compare APRs from different money lenders and take the cheapest
• Have a negotiating leverage from realtors and home sellers to buy homes at a cheaper cost
3. Reluctance in negotiating terms
Most home buyers do not negotiate when buying a house because they avoid being confrontational with the seller! This should not be the case. As a home buyer, you should negotiate for a better price regarding the location of the house, its current condition, design, and floor size among other factors. You should not just agree to a price tag without even trying to negotiate. However, negotiations should not be hostile, but instead, it should be done professionally and equitably for the sake of both parties and future relationships even though people have different negotiation skills.
4. Failure to have your new home inspected by an independent professional
Most home buyers mostly do this mistake thinking that their new homes are perfect. You should always hire an independent inspector to carry out inspections on your new home to know its possible flaws. You might be amazed to find out some details you couldn’t be it not for an inspection. It is advisable to hire your inspector rather than relying on the seller’s inspection report or the real estate inspector because they may give you biased information. It costs about $300 to hire an investigator and believe me it’s worth it!
5. Failure to ask neighbors about builder’s reputation
Before finalizing on buying your new home, you should inquire from the immediate neighbors about the reputation of the builder. Most likely, they know who built your house, when it was built, materials and problems faced their level of professionalism and experience, etc. All this information is important to help you make up your mind on whether to finally buy the house or not.
Neighbors are a source of information, and since they will be your immediate friends after you relocate, it’s not wrong to ask about the reputation of the builder. Later, you can search for the contractor online to know how he or she is rated and the comments other home owners have about the builder. Ideally, from their website, you can easily get a lot of information e.g. their location, services they offer, a level of experience and their contact details in case you need to contact them.
6. Neglecting to ask for a ‘punch’ list before closing
A ‘punch’ list is a list of problems that need to be fixed in a house. Since every house might have its problems, you should ask for a punch list to know its current state and to make a decision on whether to go ahead and buy the house. Ideally, a good and reliable builder usually gives you a punch list after selling the house, but in case you did not get one, you should not hesitate to inquire.
A builder usually marks the areas in a house which need to be fixed with a red tape and have his workers fix them before the house is sold. Some problems are simple and easy to fix but other needs professional skills and time to get repaired. However, after they are fixed, another punch list walkthrough is made to ascertain that all the items on the punch list are fixed. If you get a reliable builder, he will take care of the problems before you close the deal, but in most cases, manufacturers tend to pressure the buyers to close the deal before they have fixed all the items on the punch list. You should never close the deal of buying a house before it’s finished.
Buying a house is a life investment, and it should be done with a lot of care to avoid losing money. If you’ve never purchased a house before, you can hire a professional e.g. a realtor to help you through the process. However, you are supposed to be very keen to avoid scams or any form of exploitation.Posted on: May 16, 2017, by : networkrealty