Home Buying DONT'S!!


Buying a home is a daunting process filled with tons of steps and fine details. Without planning ahead and working with the right agent, home buyers will have a tougher time navigating through the deals. Hopefully this blog will point you in the right direction whether you work with me or not.

Common Mistakes Home Buyers Make

Buying Too Much Home 

It's so easy to overspend on anything, but overspending on a home can be one of those life-altering decisions that effect you and your spouse's lives for years to come. So don't mess this up! This is why you must pre-plan a max budget for loans, closing costs, taxes, insurance, renovation, moving, and unexpected maintenance costs. If you are not good at any of this, you should hire a tax, attorney, and finance professional to get your ducks in a row. Check out my pre-approved vendor's list to get pointed in the right direction.

Not Knowing Their Credit Score

A credit score is important for determining whether you are pre-qualified for a home loan at all, what type of interest rate you can expect to get, and whether you are able to even entertain offers for high-maintenance co-op boards; as they tend to have restrictively high qualification standards. 

This should be one of the first things to get before even starting your home buying process, and it is one of the easiest to get. Credit Karma currently provides deeply insightful reports of your credit score, and breaks down how the scores were divvied up. They also provide Equifax and Transunion credit scores. Best of all they are free; no excuses.

Failing To Get An Appraisal

Getting an independent appraisal before getting approved for a loan, and before making the offer is the wisest thing you can do because it enables you to know how risky a purchase is. Oftentimes you won't have the time to make an appraisal before an offer because there may be competitors vying for the same house as you at the same time. So often what people do is they make offers based on comparative market data, that your Realtor maps out for you, and they make initial offers with contingencies such as bank approval, inspections, and/or appraisal. 

Here's why an appraisal is so important. Banks take the Loan To Value (LTV) ratio seriously. It is one criteria of many that they employ in order to determine how risky a housing asset is. It also determines how good of a mortgage rate you get. Oftentimes, LTV's of 75% or less have lower rates than LTV's of 80% or more. Additionally, it protects the bank's downside as the appraisal lets them know how much the home can sell for, what it will appreciate for, and peace knowing that they won't be loaning out more money than they should. 

It also gives you leverage to negotiate price. You will have a legitimate analysis of what the home is worth compared to the market, condition of the home currently, and forward-looking reports of the neighborhood; market; and more. 

Not Researching Local Schools or Neighborhood Scores

There are two reasons why researching local schools & neighborhood metrics such as crime scores are so important. 
  1. High scores for local schooling and crime will positively effect future property values over the long-term. Peaceful neighborhoods with great education tend to appreciate over time whereas homes in not-so-great neighborhoods tend to depreciate or plateau in growth. Keep in mind that Realtors are not allowed to steer their clients to any certain neighborhood based on discrimination. This is not that. 
  2. If you plan on raising your family in the home you purchase, schooling is important for a number of reasons. The first reason is that you can be assured that your child will develop better in high-end schooling environments. Unless you are single and are purchasing homes in neighborhoods with positively-changing developments or government funding, you should otherwise take local education seriously if you are planning on raising a family. The second reason is that private schooling is very expensive too. Keep that in mind.

Conclusion

These are just a couple of don'ts to keep in mind prior to purchasing your home. This is why buying a home is so tedious and time consuming. This is because you are looking at a number of different variables and not just the transactional aspects of offer-writing and counter-offering; along with acquiring mortgage loans and trying to beat all-cash offers. I hope this list of don'ts challenges you to plan ahead and make sure you are setting yourself up for success over the long run. Hopefully this blog post also presents you with a perspective of real estate agents being your long-run business partners and friends as opposed to enemies like most people do. My goal is to earn your trust, not just to be your go-between. 

Shout outs to the Money team for the support. They recently penned an article that really sums up home buying. It was written in a precise and well-worded way to help you if you were thinking of buying a home for the first time. They've mentioned how they used my blog post as inspiration for their post. They have a very well designed website filled with a great team. Check that article out here.


Home Buying DONT'S!! Home Buying DONT'S!! Reviewed by Alex Sung on November 06, 2019 Rating: 5

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