Buying a home for the first time is an exciting milestone. The transition from renter to homeowner can feel liberating and terrifying all at the same time. Just as with any new journey you embark on, you may make some mistakes along the way through the buying process. If you want to ensure that you have a smooth process from start to finish, it’s vital to prepare yourself for the potential pitfalls that can occur. Take it from a real estate agent, avoid these common mistakes many new homeowners often make.
It may sound obvious, but maintaining a healthy credit score is an extremely important part of the home-buying process. You must keep your score in the good to excellent range in order to qualify for most loans. Plus, the better your credit score, the lower your loan interest rate will be. For every little bit you can reduce your interest rate that means lower monthly payments and the potential to save thousands over the life of your loan. If you don’t think ahead and take steps to bolster your credit score before you’re ready to buy, it will likely slow down or hinder your ability to buy a home.
It’s important to know the facts before you enter the home-buying arena. There are a lot of misconceptions about the process that you should be aware of. For instance, you don’t necessarily need a 20 percent downpayment in some scenarios. While a larger downpayment can score you a better rate and lower monthly payments, every person’s financial goals are different. In some situations, it may make more sense to put down a smaller down payment. If you don’t have 20 percent to put down or don’t want to apply such a large amount, shop around for different types of loans to find one that offers the option for a lower down payment.
Another thing to be aware of is that many states, including Florida, have first-time home buyer deals. Because many first-time homebuyers often don’t have the savings necessary for a large sum downpayment, these special offers tend to focus on special loans that allow you to put down just a few (or in some cases zero) percent down.
Finally, if you’re serious about starting your homebuying journey, it’s a good idea to get a pre-approval letter before you start shopping around. This is beneficial to home buyers in several ways. For starters, getting approved is the simplest and most accurate way to determine how much house you can afford. You may think you have a handle on all the costs associated with owning a home, but this isn’t the time to risk human error. Having a preapproval letter gives you a reliable price range to stay within so you aren’t tempted to set your sights too high or take on more than you can handle. As a bonus, being pre-approved demonstrates your creditworthiness and will make you appear more serious to sellers.
Buying a home is a big investment but it’s important to not dig yourself into a financial hole by sinking every last penny you have into your downpayment. Although you might technically be able to afford the home you have your heart set on, when you look at all of the other expenses involved in homeownership, you might be spreading yourself too thin.
For instance, make sure that you also take into account your closing costs as well as the cost of insurance, property taxes, and an appraisal fee. All of these fees can really add up and if you put all of your cash toward your downpayment, you’re going to be left scrambling to figure out how to cover them.
Besides all of the money you’ll need to hand over on closing day, don’t forget that you might need some money to cover your moving expenses and even some minor repairs or upgrades. The best plan is to come up with a budget before you start your home search so you know exactly what you can and can’t afford.
In today’s world of Zillow and Redfin, many people often wonder if they even need a real estate agent. After all, you can browse home listings for free and get many of your homebuying questions answered through a simple online search. Unfortunately, buying a new home is a lot more complicated than that and it helps to have an expert in your corner.
Your real estate agent is another important member of your home-buying team. They’ll understand your local housing market and can help you tour homes, submit an offer, and negotiate your contract. An experienced buyer’s agent will help you secure a great deal while avoiding home-buying stress, so it’s important you have someone you trust. Interview a few real estate agents to get to know them and hire the agent you work best with and who has the local expertise you’re looking for.
Home inspections protect home buyers and lenders in cases of serious issues with the home’s structure or core systems. However, in a competitive market where you have multiple people bidding on the same house, you might be tempted to forego a home inspection in order to win the bid. But, this could be a huge mistake.
Home inspections and the security they provide shouldn’t be undervalued. Even if the home looks like it’s in great shape, an inspection report could shed light on potential dealbreakers. If a home inspection report notes critical issues dealing with the foundation, roof, wiring, or plumbing, you might want to think twice before signing on the line. Depending on the severity, these types of problems can pose a serious safety issue and repairs can run you thousands or even tens of thousands of dollars.
Hopefully, your home inspection report comes back with minimal issues. Whatever it does list, however, can then be used to negotiate with the seller. For instance, you can ask for a lower purchase price, for the owner to make certain repairs, or for money that will go toward you making the repairs yourself.
Save time, money, and avoid the mistakes made by many new home buyers. If you’re in the market to buy a home in St. Augustine and are looking for a real estate agent, give me a call! I would love to help you successfully navigate this exciting journey.