Buying a home is a major decision of which you need to do you research on and go into with your “eyes wide open.” Throughout my career as a real estate agent here in the Oak Island area I’ve witnessed possibly hundreds of real estate transactions, and thousands of mistakes to go along with them. Here are the top 5 mistakes that I’ve seen, that I feel can potentially cost first time homebuyers thousands if not avoided.
1. Not Discussing Finances Honestly and Realistically
I’ve seen too many buyers who were either too embarrassed or fearful to discuss their finances in order to determine their realistic and conservative purchasing power. An open and honest conversation with your mortgage lender (by referral) will help you to get this process started. It’s very important to find a mortgage person that you can trust and feel comfortable with so that you can let them guide you through this process and advise you accurately. To begin looking for a home before you establish your financial capabilities will create discouragement, as well as waste your time. Nothing can seem more hopeless than to find a home you love only to discover it’s well beyond your budget.
2. Not Doing Your Homework
Taking blind steps with this purchasing process is a more common mistake than you would think, and not a wise thing to do. Too many unknowns can create a huge disappointment down the road. What should be an exciting time in your life can turn into a frustrating and taxing scenario. Know the area/neighborhood where you want to buy and talk with the neighbors to learn about the home owners’ association if there is one, as well as to learn about the community as a whole. Ask about the real estate activity. Not all areas allow For Sale signs. Knowing the turnover is important and the reason for it equally so.
3. Buying more Home than You Can Afford
All the positive emotion that surrounds purchasing a home can disguise the realty of actually paying for it. Your credit score and overall mortgage qualification process helps you to determine the top of the range that a lender will consider financing for. However, nothing will become more of a burden than going into debt and never having any breathing room, or being “house poor” as so many people over the past 5 years have experienced. None of us are immune to problem-free living. An unexpected expense can cause your budget to be totally blown, and it may occur month after month. So don’t bite off more than you can chew. Buy a home that you can comfortably afford that is well within your budget. While it is great to have a grand home with all the bells and whistles, it is not so grand when you can’t afford the monthly payments and your living in daily financial stress
4. Realize that You Probably Won’t Live there Forever
This is something that is especially true for a first-time, or a young adult buying a home. You think that you will live in this home forever when the reality is that people move on average every 3-5 years. Don’t spend tons of money remodeling or adding an expensive addition if you do not plan to live there longer than six or more years. However, when you reach the point in your life that you are ready to settle down, investing in a new project becomes more logical and cost effective.
5. Working with an Agent that You Don’t 100% Trust
The last mistake is to work with a broker/agent that does not make you feel at ease. You have to trust the person who is helping you in this tremendously important purchase. Talk to several brokers/agents before you decide which professional provides the most comfort when discussing your personal finances, as well as understands your wants and needs. Do not select an agent that promises you the world, but rather choose an individual based on their knowledge, honesty, and most importantly, one that focuses on what is in YOUR best interest. A good broker will ask you question after question after question. This is a good indicator of the level of importance your relationship means to them.
There are more areas to focus in addition to this list of five. Feel free to contact me to discuss more of your specific needs and I’d be happy to walk you through the process.