Tis the season … the Spring housing market is taking off. If you are first time home buyer, now is the time to get prepared with the basics so you can take advantage of new inventory coming on the market and the continued low interest rates still under 4% (and if you’re new to it all, under 4% is great!).
5 Common First-Time Home Buyer Mistakes
1. They don’t ask enough questions of their lender and end up missing out on the best deal.
2. They don’t act quickly enough to make a decision and someone else buys the house.
3. They don’t find the right agent who’s willing to help them through the home buying process.
4. They don’t do enough to make their offer look appealing to a seller.
5. They don’t think about resale before they buy. The average first-time buyer only stays in a home for four years.
Source: Real Estate Checklists and Systems, www.realestatechecklists.com.
How to Avoid 5 Common First-Time Home Buyer Mistakes
1. They don’t ask enough questions of their lender and end up missing out on the best deal.
ASK QUESTIONS!
What is the current interest rate? What will my monthly payment be including taxes & insurance?
What happens if the rate goes up?
What happens if the rate goes down? Is there a program to make sure I get the lower rate if it decreases before I close? Is there a fee for that program?
What are the fees involved with this loan? Will I be charged PMI (private mortgage insurance)? Can I avoid that?
What do I need for a downpayment?
Can I get a gift of money from friends or family to put towards my downpayment?
If I am buying new construction which won’t be ready for a few months, can I lock an interest rate in now? Are there any extended rate lock programs available?
2. They don’t act quickly enough to make a decision and someone else buys the house.
The Spring market can move at a fast and furious pace … BE PREPARED and READY to make an offer!
If there is a listing you love and think is a good value, chances are hundreds of other buyers and agents are thinking the same thing. Let’s set up a search NOW so you get daily updates of homes in your price range. Even if you are thinking Summer, now is the time to get comfortable with the market and a better feel for what you like and what you can afford.
Then, set up time to meet with a mortgage officer. This is a great time of year to do it since you already have much of the paperword handy from filing your taxes. They will consider your credit score, income, debt, and assets when figuring out the mortgage amount for which you will quality. Remember, you need to be comfortable with the monthly payment!! You know your lifestyle, so even though you may qualify for a higher mortgage amount that doesn’t mean you have to search that high. If you are a solid borrower, they will give a prequalification or pre-approval letter that we can then present to strengthen any offer you may make. If the mortgage company, feels you need to wait a bit to work on credit or decrease debt, ask them what specific things you should work on and pay off – it will make a difference.
3. They don’t find the right agent who’s willing to help them through the homebuying process.
I truly enjoy sharing the knowledge I have gained over the years both personally and professionally to make a first time home buyer as comfortable as possible with the process. I have no expectations of you except that you will be honest, willing to listen & learn, and ask a million questions along the way. You’ve never done this before and honestly things are constantly changing in Real Estate. Friends and family will have their opinions, but remember how important it is to get the facts and to form your own opinion. I am ready to guide you from starting your search to closing on your first home.
4. They don’t do enough to make their offer look appealing to a seller.
There is more to an offer than just sale price. As a buyer’s agent, I always urge buyers to think about presenting a strong offer.
Present a $1000 check as a deposit with the offer (If the offer is accepted, that money will be applied to the amount you ultimately need to bring to the closing anyway. If the offer is not accepted, the check gets handed back to you.)
Have a pre-approval letter from a reputable bank ready to submit with your offer.
Think about the closing date – would a quick closing work better for a seller or an extended closing? Maybe a seller would like flexibility with a closing date because they are searching for a new home themselves or building one?
Are you looking to have closing costs paid for so there is less money out of your pocket? If you are in a bidding war with other buyers, consider offering over the ask price so you can finance your closing costs into the mortgage (The seller would credit you back that amount at closing. Sometimes this can lead to issues with the bank’s appraisal of the property so make sure to discuss with your buyer’s agent.)
Time is of the essence when selling a home. Make sure dates for inspection, Purchase and Sale signing, and mortgage commitment are reasonable but not drawn out. A seller does not want to lose marketing time if your deal is not going to go through.
5. They don’t think about resale before they buy. The average first-time buyer only stays in a home for four years.
You likely will not be in your first home forever. Think into the future about when you try to sell this home. If it is a hard location to sell now, it is most likely going to be a hard location later as well. When you sell, you will be paying the agent’s commissions (typcially 5%). Do you think this home will appreciate to cover that and allow you to purchase a new home? Are there major projects that need to be done now? Buyers are going to want those projects to be completed when you sell or they are going to expect a drastically reduced price to adjust for that. Every property will have its advantages and disadvantages. Let’s discuss those now and anticipate how to correct for them in the future. Your offer should reflect your concern with resale value.
I really do enjoy working with First Time Home Buyers so please let me know when you are ready to start the process.
I am ready to guide you through the whole the process, from search to close!
Jen McMorran, Realtor * 508-930-5259 * jen.mcmorran@verizon.net
Kensington Real Estate Brokerage * www.jenmcmorran.realtor
Be Home. Be Well. 