Buying a home doesn’t need to be complicated…these tips will guide you!
Buying a home is not an easy process. It is easy to make small mistakes that could cost you thousands or even the entire deal. Here are just a few that I’ve identified and some tips on how to help you avoid them:
1. Borrowing the maximum amount allowed by the lender and not creating a realistic budget of your expenses
Have your lender thoroughly explain ALL of the costs associated with owning a home. Make sure you are prepared for these known or unknown expenses before you sign a contract. Taxes, insurance, association fees, home maintenance, utilities and major/minor repairs are just a few. Knowing what these costs are and budgeting for them ahead of time is important for anyone purchasing a home. If you are interested in buying a particular property, have your agent ask the seller’s agent to provide the monthly utility costs or call the utility companies for estimates.
2. Planning ahead
Resale value is an important factor when buying a home. On average, homebuyers stay in their homes approximately four to six years. Plan on making repairs and upgrades while living in the home to maximize your resale value when it is time to sell. It’s your real estate agent’s job to ask the right questions to keep you on track so you may see the big picture.
3. The dreaded pre-approval
Homebuyers, especially first-time and millennial buyers, are wary of filling out that pre-approval application for the mortgage lender. THE VERY FIRST STEP IN THIS PROCESS IS THE LENDER PRE-APPROVAL! Buying a home is complex process. We must complete all steps in the correct order to ensure a smooth transaction.Why would you want to waste time looking at homes you can’t afford? Doing this pre-approval process ahead of time is vital. If there is something negative on your credit report, it’s best to find it early in the process so you have time to correct it.
Ever heard of the saying, “Curiosity killed the cat?” Well, here’s another one: “Indecision killed the deal.” Not moving quickly on a house or taking too much time to make a decision is common. Indecision gives someone else the opportunity to scoop up that home before you have a chance to send in the bid to buy it. A multiple-offer situation is good for the seller, but for a buyer — not so much. In this competitive real estate market with low inventory and high buyer turnout, you need to move quickly in order to get the house that you want. Discuss with your real estate agent the reasons behind the hesitation. Some of those reasons might be solvable, but you never know if you don’t ask.
5. Only checking online sources for mortgage rates and available homebuyer programs
As much as everyone loves to do everything from their computer or smartphone today, (especially the millennials), this is one thing that should be done in person. It is always best practice to call a local mortgage lender and sit down in person with them to talk about the most current rates and programs available. A good amount of lenders that you find online have only teaser rates posted on their websites. Even worse, if you choose a mortgage lender that doesn’t have a local presence, a lot can change once they get the paperwork in front of you at the closing table. Even the appraisal that is done can be off by thousands of dollars if the in-house appraiser the lender uses is not familiar with the area in which you are buying. An accurate appraisal is crucial. Not using the right comps in the neighborhood can be catastrophic to the buying process. If it doesn’t appraise for the amount of the loan or higher, you will have to come up with the balance to cover the sale or the deal falls apart. There are many new programs available to buyers, especially first-time buyers. It’s almost impossible to figure out these details by independently searching online.
6. Debt-to-income ratio (DTI — recurring monthly debt divided by monthly gross income)
Most homebuyers have no idea what this is and, in turn, don’t know that it affects their buying power when looking for a home. Buying a car or a big-ticket item before qualifying for a mortgage is a common mistake made by excited buyers. Any extra costs, such as car payments, increase this number. The lower the number, the better. Lenders typically do not want it to be higher than 43 percent. You must be careful, as different lenders have different DTI ratios depending on the type of loan. It’s your real estate agent’s job to give you the facts about the buying process and guide you through it. It is your loan officer’s responsibility to give you the facts about your buying power and guide you through the process. Hopefully these tips will help you with your next home purchase.
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Las Vegas Valley Realtor® Joshua Holmes views his role in assisting buyers and sellers as more than a career- it is an opportunity to create a positive impact on the life of another.
Holmes believes in creating a powerful partnership with his clients. His business approach is direct and successful: he attentively listens to client needs and matches them to an ideal property. Holmes assures an honest and efficient transaction.
NEW HOME VS. RESALE/ WHICH IS THE RIGHT DECISION?NEW HOME VS. RESALE:
"“Josh is very professional and task oriented. Most importantly, he's knowledgeable about building and construction which is an added plus when considering buying a house and/or property.” Dave & Heather Snyder"