Why You Should Hire a Real Estate Agent
ERRORS TO AVOID AND HOW TO DO SO WHEN BUYING A HOME FOR THE FIRST TIME
The market can be difficult to understand for both experienced and first-time home purchasers. It becomes even more difficult with the increasing competitiveness of today’s market. Below are three common errors that first-time home buyers make and ways to avoid them.
Error #1: SEARCHING FOR HOMES PRIOR TO OBTAINING/APPLYING FOR A MORTGAGE
In today’s increasingly competitive market most offers are not even taken seriously unless they are accompanied with a mortgage pre-approval. Largely, sellers will not consider offers with financing unless they are provided with a valid pre-approval because removing a home from the market prior to having a buyer apply is dicey.
To avoid this common error, and ensure that your offers are considered carefully, buyers should obtain a valid pre-approval letter prior to even starting the search for a home. This provides the seller with a serious offer that is compact. When choosing a lender, work with one that will provide you with a fully encompassed report including credit, assets, and income. This way the lender can ensure that the buyer is meeting all of the contract terms prior to the actual offer being made.
Error #2: BUYING A HOME OUTSIDE OF THE BUYER’S PROJECTED BUDGET
When a buyer finds the perfect home, it is certainly hard to just walk away from it because it is over budget. However, it is never a good idea for buyers to extend themselves to a position that will be risky for them, ultimately causing additional monetary stress and placing the buyers at risk of a foreclosure down the road if anything changed.
To avoid this, buyers must narrowly focus on what they can afford as a monthly payment on a home, even when unexpected things arise, instead of going after the maximum loan they are qualified for.
Error #3: NOT TAKING YOUR CREDIT INTO CAREFUL CONSIDERATION AT ALL TIMES
Another common mistake, and detrimental at times, is when the buyers have been pre-approved and they take out new lines of credit or financing. This can ultimately threaten the home closing and the actual approval for the loan, making the buyer no longer qualified. Most lenders compose a final check on the buyer’s credit to see if any changes have been made that could risk the buyer’s ability to close or jeopardizes the final loan terms.
To avoid this error, buyers should NOT take on any new lines of credit, including new credit cards, nor should buyers close any existing accounts which will impact the credit profile. Buyers should also refrain from borrowing any new loans from the time of applying for the mortgage to the actual closing day of the home. Instead, the buyers should focus on spending their efforts during this time period working to pay down any already-existing balances on their credit profile to around less than 30% of the approved credit limit, and ensure that all monthly bills are continuously paid on time.
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