Here is a list of a handful of mistakes a home buyer can make costly them money, time and frustration. Educate yourself through this list so that you do not make the same mistakes while purchasing a home.
If you are serious about searching for your first home or another to move into, you must learn your credit score. If it is less than desirable for you, make a plan to raise it. Too many people ignore this important fact and are then disappointed by the interest rates they are quoted.
When you have corrected any errors in your credit history you must then pay your debt balances to 30% usage or less, that will raise your score substantially.
Borrowers with credit scores below a certain rating get charged higher up-front fees than those above that line. It pays to wait just a little longer to get that score where it should be and more money in your pocket in the long run.
Opening a new credit card, auto loan, personal loan, etc. results in a drop to your credit score and you may sometimes be labeled “high risk”.
We have seen it so many times where a buyer is pre-approved for a home loan and then make a big purchase. Then they find a home they love and the lender refuses their loan because their score had dropped due to that purchase. It is quite devastating.
Opening the phone book, closing your eyes and choosing a low-cost home inspector can cost you more in the long run. Finding costly flaws in a home that can really rain on your parade is a good home inspectors job.
Especially if you are purchasing a foreclosure or short sale investment property they tend to be a bit distressed and should definitely be looked over well so you do not get any surprises you cannot afford.
Just remember, the cost of a surprise repair goes way beyond the cost of a good inspection!
Buyers usually put between 1% and 3% in earnest money when signing a sales contract. This is not returned if they back out of the deal except under certain circumstances listed in the contract.
New or inexperienced buyers may be quick to sign a contract that do not include contingencies, such as, finding major problems in a home inspection, failed financing or an under appraisal.
Be sure to protect yourself and your money by making sure those contingencies you want or need are in the contract before you agree to sign.
Do not underestimate the cost of insurance and fail to budget for it. Many uneducated homebuyers do not understand what is and isn’t covered under insurance. There are extra add-ons that are not covered under regular insurance such as flooding, earthquake, problems caused by lack of maintenance and hurricane damage.
Just like you check what the cost of insuring a new car would be you should most definitely do the same for a new home. Purchase the proper insurance add-ons according to your area. For instance, if you live in a high water zone which tends to flood with heavy rains it is in your best interest to add Flood Insurance.
Your Real Estate Agent is here to help you through these processes. Use their knowledge to your advantage. Approaching home buying can be exciting and life-changing if done in the right way and under the guidance of your local realtor.