Most people dream of buying a home and know exactly what they are looking for and what they would like to spend on the mortgage; however, they do not consider several important details.
Along with the hot home-buying market comes heavy competition for the homes, and many are making all-cash offers. But, if you aren’t familiar with all the complexities of purchasing a home, you may have future financial regrets. Here are the top five mistakes that first-time homebuyers often make.
- They don’t take into account all of their options. Although purchasing a home is often the best financial decision you could make, it doesn’t work for everyone. For example, if you know you’ll only be in the home for a couple of years, it may not make sense to buy after you amortize the closing costs for that time period.
- They don’t consider costs other than the down payment. Homeowner’s insurance, maintenance, or HOA (Homeowners Association) fees and closing costs may eat up your savings and leave you with no emergency funds.
- They don’t get a home inspection. A home inspection is no way to cut the costs of buying a home. The defects a home inspector may find far outweighs the price of a home inspector, and you may save thousands of dollars on future repairs.
- They fully expect their home to appreciate in value. Many home buyers think if they dump their life savings into a home and keep it for a few years, they’ll get a significant increase in the value of their property. While home equity is nice, the home is one of those assets that aren’t very liquid if you need money fast.
- They don’t consider the debt-to-income ratio before looking for a lender. A lender considers this ratio when looking at your ability to pay for a home. If you’ve accrued too much debt, you may not be approved. Show a history of saving – not getting into debt before you apply for a home mortgage.
(Also, keep a close eye on your credit score before applying with a lender. Even if you have a pre-approval letter, you’re not guaranteed the loan. If your score changes a great deal, you may find out just before closing time that you don’t qualify.)
If you’re a first-time or novice home buyer, it’s imperative that you spend some time with an expert, such as a trusted realtor, before rushing into the home-buying experience. Today, many home buyers rely on websites and may get a false sense of the true values of homes in the area. A great realtor can give you a reality check on home prices, and they keep up with changes in current market values and how the various mortgage companies do business!
Acting Into Appraisals
Investments, terms for loans, processes, and other parts of real estate can often be overwhelming to someone who hasn’t received a degree in real estate. If you are looking for definitions and actions behind those definitions, then don’t forget about getting the right appraisals. This will help you if you are looking for the right market for your home.
An appraisal consists of a professional opinion that is made about a property. Included in this opinion are several factors that allow for this statement to be made. Overall, the appraisal will lead to the conclusion of what the market value is. If the market price can not be defined easily, then someone can look at the different parts of the property and determine what they believe the market price should be. Usually, this will be done by an inspector looking at the various mechanics that may have been swept underneath the rug.
An appraisal is a necessary requirement when one is looking into selling a home or having the property insured or financed. It may use several external resources and definitions of what market value may include in relation to the opinion being made in order to determine the price value of a home. When getting an appraisal, you can expect that the estimates will be based on the various factors that are related to the market at the time. Instead of just examining the parts of the property, an appraiser will also examine the neighborhood and see what everything else is worth in relation to the property.
By appraising a property, you will know how much the home is worth in relation to your own needs on the property and in relation to everything around it. By observing the standards that are set both inside and outside, you will have the ability to know when the timing is right to get involved with your piece of real estate.