After working with homebuyers in the DMV for nearly four decades, especially first-time homebuyers, I have seen some very common mistakes that buyers make. Here is advice that I give my clients to avoid major pitfalls which I hope you will take to heart. Plus, it’ll make your life much easier and save you a few headaches.
Here are seven mistakes I never let my buyers make.
Not finding out their credit score
The best house-hunting intentions will all come to a halt if the buyers do not have a credit score sufficient enough to obtain a mortgage. Most lenders will not approve a mortgage if an applicant has a credit score below the good to excellent range.
It’s a good idea for would-be buyers to get their credit reports about a year in advance of house hunting. Credit reports can be wrong, depending on the source the buyers choose, and it might take time for them to correct their scores.
Not getting pre-approved for a mortgage
Another of the mistakes to avoid when looking for a new home is delaying the mortgage preapproval process until they are well into the house hunting process. This is a bad idea for two reasons.
First, it avoids heartache if you aren’t ultimately approved for a mortgage once you’ve found the house of your dreams. By getting preapproved early, it lets you know of any issues in the approval process up front and rectifying them. Face it, even the best credit worthy person may have a mistaken blemish on their credit reprot.
Second, if you’re in a hot real estate market, the first person to make a bid may have an advantage. Pre-approval lets you have a chance at making the first bid.
Not having a viable budget
Most homebuyers are savvy enough to budget for their mortgage costs but you may be ignoring the other costs of homeownership — property taxes, state and local taxes, utilities, upkeep and private mortgage insurance (PMI). And that’s just for after the purchase.
Before the purchase, homeowners should plan on appraisal and inspection costs which are tied to the size of the house. The more expensive the home, typically the higher the inspection costs because it is bigger.
Homeowners need to budget for all homeownership costs and have money saved up for repairs. You also, frankly, should have a cash cushion of at least three months’ income in case of unexpected costs early in their homeownership. Your lender is going to insist on cash reserves as part of the loan process.
Not getting a sense of the neighborhood
Neighborhoods matter. Homebuyers need basic information about the neighborhood. Each neighborhood has its own mini culture. Will you feel at home among these neighbors?
You can walk around on the weekend to get a sense of it. A couple of things you should ask yourself are:
- Does it have open green space, parks and hiking trails, (if that’s important to you)?
- Will you be close to major highways and public transportation?
- Is the neighborhood safe, or does it have crime issues?
- Are the school districts good?
- How is shopping? Check out the grocery stores and restaurants. What are the people like that you see there? Where is the closest Starbucks? (Starbucks tend to raise the value of nearby neighborhoods!)
The answers to these questions will help them decide if the neighborhood is the right fit. This is especially important for buyers who are relocating to a new area.
Not being certain the kind of home you want
Homebuyers should make a list of the type of home and property they want, suitable for their budget of course.
Otherwise, you can spend unnecessary time and effort looking at homes or properties unadaptable to your budget. Fixer-uppers may be a good starting point due to a limited budget, but the daunting aspect might quickly wear on them.
It also helps to make a list of must-have and negotiable home qualities. This will eliminate future financial strain as your budget will need to adapt to your growing wants and needs.
Not knowing what the land is zoned for
If you purchase land, it’s essential to know how it is zoned. Zoning regulations change frequently, so you need to know of any recent changes, and you shouldn’t rely on older paperwork. provided by that “helpful” seller.
Even if you are not buying a vacant piece of property, zoning can be a real issue if you want certain additions to the property later. It can also be an issue if you have a home-based business or want to start one at some future point. Don’t fall into the trap of buying a property with zoning that will not accommodate their dreams.
Not getting the inspection results before you fall in love
It’s not uncommon for homebuyers to see a house, fall in love with it, and essentially, make the decision before they really know the property’s true condition. A house and grounds can look fine with no visible problems but have issues an inspection will surface. These issues can include costly structural and health concerns that may make the house uninhabitable.
No homebuyer should make a final decision until the inspector has ruled. Homebuyers often make mistakes if they’re not adequately guided. Choosing a home is a major life decision. It’s easy to overlook essential steps, especially if you are first-time homebuyers. If your agent tells you that you don’t need a home inspection, what you really need to do is run – run fast, run far away – from that agent. That realtor is NOT representing your interests.
These seven steps are your means of providing good service and making sure you’ll get through the sale without a hitch.