​​Karen Summers Realtor
​​​                             When Results Matter

The Colony Homes Specialist​

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Costly Home Buying Mistakes Part 1
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For many people, a home is the largest purchase they will ever make, but it need not be the most difficult.  Shopping for a home is exciting, exhausting and a little bit scary. In the end, your aim is to end up with a home you love at a price you can afford.

Before letting your emotions carry you away, step back, take a breath and ask yourself a few important questions:

  • Do you understand the market you're buying into?
  • Why are you buying?  Are you buying because your friends or your parents say you should or because you really want to?  
  • Do you understand the responsibility that goes with home ownership?  
  • Do you understand the financial ramifications and what happens to your net worth if you purchase and then the market drops?  
  • Are you assuming that the value of your home purchase will increase over time?

It is really important to be aware of some emotional mistakes that can influence your buying decision.  Arm yourself with these tips below to get the most out of your purchase and avoid making 5 of the most costly mistakes that could put a hold on that sold sign.

1.  People Don't Understand What They Can Afford.  
Going home shopping for the first time may be a lot of fun when you get to cruise around and look at different properties.  

However if you're not preapproved, there isn't a lot of point to going out with a realtor wasting your time and your gas.  If your realtor is a pro they won't even take you out unless you've had a verified preapproval.  

A verified pre-approval lets you know how much you can comfortably offer for the homes you like.  A verified pre-approval involves a mortgage banker verifying your income, your employment and obtaining a credit report.  He will then run the calculations to determine the amount of your loan pre-approval based upon payments that you can afford.   

2.  Mortgage Qualification Fall-out
Be aware that even if you have been pre-approved for a mortgage, your loan can fall through at the last minute if you do something to alter your credit score, like finance a car purchase. If you cause the deal to fall through, you may have to forfeit the several thousand dollars that you put up as deposit when you went under contract.  There might also be legal fees owed a well.

3. Failing to Consider Additional Expenses
Once you're a homeowner, you'll have additional expenses on top of your monthly payment. Unlike when you were a renter, you'll be responsible for paying property taxes, insuring your home against disasters and making any repairs the house needs.  

If you're interested in purchasing a condo, or a home in a planned community with community amenities and landscaping,, you'll most likely have to pay maintenance costs monthly regardless of whether anything needs fixing because you'll most likely be part of a homeowner's association.  Homeowners association (HOA) monthly fees can be up to several hundred dollars a month and are collected from the home owners in the form of HOA fees.

Plan For The Future
4. Being Too Picky
Go ahead and put everything you can think of on your new home wish list, but don't be so inflexible that you end up continuing to rent for significantly longer than you really want to.
Today's market has conditioned homebuyers to make the mistake of thinking there's always a better deal just around the corner.  First-time homebuyers, and even home buyers moving up, often have to compromise on something because their funds are limited. You may have to live on a busy street, accept outdated decor, make some repairs to the home, or forgo that extra bedroom. Even in the best of markets, we cannot predict what will happen tomorrow.
5. Lacking Vision and Future Planning
Don’t buy a house if you’re planning to move again soon.  If you’re a renter, it can be frustrating to write that rent check every month and have no home equity to show for it at the end of the year. But if you aren’t certain that you’re going to stay put for a few years (rule of thumb says 5 years), it’s probably not the right time to buy—equity or no equity.  
Don’t assume that you’ll be able to rent it out or sell it when you move.  If you aren’t in an area with a strong rental market that might allow you to cover the mortgage on your home if you move elsewhere, then consider sticking with a rental for now.
This article will be continued, with an additional 5 tips.  To read it now, click here
If you have questions, or would like to chat, reach out to me at 951-333-8065, or shoot me an email at [email protected]

Tags: home buying, pre-qualification, credit report, HOA, income, mortgage loan
Filed Under:  Home-Buying Tips

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