Cheryl Fleming, GRI, ABR's Blog
Buying a home is a complicated process with a lot of opportunities to make costly mistakes. There’s no high school class to prepare you for buying a home but there probably should be. If you’re a first time homebuyer and you came across this article looking for advice, congratulations--you’re already doing the most important thing you can when making a big financial decision: the research.
In this article, we’ll cover some of the most common mistakes that first time homebuyers make when entering the real estate market. We’ll break it down by the three main phases of home-buying: saving for a home, hunting for a home, and signing a mortgage.
Saving for a home
One of the first lessons that all first time homeowners quickly learn is that being able to afford your monthly mortgage payments doesn’t mean you can afford a home. Many first time buyers are often coming from living situations where certain utilities are included (water, heat, electricity, etc.). Aside from those obvious expenses, there are also things like property tax and home insurance to budget for, both of which may increase. Finally, when you’re living in an apartment and your faucet breaks, you simply call the landlord. When you own a home, especially an older home, be prepared to spend on repairs and to start learning basic maintenance skills that will save you money.
The hunt for your first home
Now that you’re aware of the costs, it might be tempting to jump in and start looking at homes. Another common mistake first time homebuyers make is to waste time looking at homes before they’ve met with a real estate agent or have gotten pre-approved for a loan. Start there, then once you know the scope of your home search, you’ll have a much more relaxing hunt for your new home.
Another mistake that first time homebuyers make is to underestimate the time and commitment it takes to find a home. When you work with a real estate agent, make sure you are available at all times. Keep your phone nearby, stick to your schedule for viewing homes, and keep a list of each home you’re considering. Showing initiative and dedication won’t just help you stay organized, it will also show your agent and the home seller that you are worth their time.
One of the most common mistakes that buyers make when it comes to their mortgage is to fail to shop around for a lender. In fact, the Consumer Financial Protection Bureau found that only half of all buyers considered more than one lender for their home.
Buyers, first time and repeat, often think their credit report is set in stone. What they don’t realize is that the three main credit Bureaus (Experian, Equifax, and TransUnion) can all make mistakes on your credit. Check your detailed credit reports and fix any errors long before applying for a mortgage to increase your chances of getting a good rate.
If you avoid these common mistakes and continue to do your research along the way, you should be able to save yourself some headaches and some money in the long term.
A closing represents the final stage before a buyer acquires a house. At this point, a buyer and seller will meet and finalize an agreement. And if everything goes according to plan, a buyer will exit a closing as the owner of a new residence.
Ultimately, there are several steps that a buyer should complete to prepare for a home closing, and these are:
1. Review Your Home Financing
Typically, a lender will provide full details about your monthly mortgage payments for the duration of your home loan. This information is important, as it highlights exactly how much that you will be paying for your house.
Assess your home loan information prior to a closing. That way, if you have any home loan concerns or questions, you can address them before your closing day arrives.
If you allocate the necessary time and resources to review your home financing, you may be able to alleviate stress prior to closing day. In fact, once you know that all of your home financing is in order, you can enter a closing with the confidence that you'll be able to cover your mortgage expenses.
2. Perform a Final Walk-Through
A final walk-through provides a last opportunity to evaluate a residence before you complete your purchase. Thus, you will want to take advantage of this opportunity to ensure that a seller has completed any requested repairs and guarantee that a house matches your expectations.
Oftentimes, a final walk-through requires only a few minutes to complete. The inspection generally may be completed a few days before a closing as well.
It is essential to keep in mind, however, that a final walk-through won't always go according to plan. If you give yourself plenty of time for a final walk-through, you should have no trouble getting the best-possible results.
Try to schedule a final walk-through at least a week before a closing. By doing so, you'll ensure that a seller can perform any requested repairs prior to closing day.
3. Get Your Paperwork Ready
During a home closing, you'll likely need to provide proof of home insurance, a government-issued photo ID and other paperwork. If you get required documents ready ahead of time, you won't have to scramble at the last minute to retrieve assorted paperwork for your closing.
If you need help preparing for a home closing, there is no need to worry. Real estate agents are available nationwide, and these housing market professionals can guide you along each stage of the homebuying journey.
A real estate agent will help you find a house, submit an offer on it and conduct a house inspection. Plus, this housing market professional can provide recommendations throughout the homebuying process to help you achieve your desired results. And as closing day approaches, a real estate agent is available to respond to your homebuying concerns and questions too.
Prepare for a home closing – follow the aforementioned steps, and you can seamlessly navigate the home closing process.
As a first-time homebuyer, it is easy to feel plenty of optimism as you search for your dream residence. And if you find your ideal house, it may seem likely that a home seller will accept your offer on the residence right away.
However, it is important to remember that a home seller might reject a first-time homebuyer's proposal, regardless of whether this homebuyer submits a competitive offer. In this scenario, a homebuyer needs to know how to move forward and continue to pursue his or her perfect residence.
What should a first-time homebuyer do if a home seller rejects an offer on a home? Here are three tips that every first-time homebuyer needs to know.
1. Learn from the Experience
If a home seller rejects an offer on a house, there is no need to worry. In fact, a first-time homebuyer may be able to resubmit an offer and find out why a home seller rejected his or her initial offer.
For example, a first-time homebuyer may lack financing at the time that he or she submits an offer on a house. But if a homebuyer gets approved for a mortgage and returns with a new offer, he or she may be more likely than before to gain a home seller's approval.
On the other hand, a homebuyer should be ready to move forward with a home search if necessary. Thus, if a home offer is rejected, try not to get too emotional. Instead, a homebuyer should be prepared to reenter the housing market and start his or her search for the perfect home from stage one.
2. Don't Dwell on the Past
For a first-time homebuyer, it can be frustrating and annoying to conduct a home search, find the ideal home and receive a rejection after a proposal to buy the house is submitted. But there is no reason to dwell on the past for too long, as doing so may force a homebuyer to miss out on opportunities to pursue other residences.
Remember, the housing market often features dozens of outstanding houses to match all homebuyers' price ranges. This means if you receive a rejection on one home proposal, you can always restart a home search. And ultimately, a diligent homebuyer should have no trouble discovering a terrific residence, even if his or her initial offer on a residence is rejected.
3. Consult with a Real Estate Agent
A real estate agent is a housing market expert who understands what it takes to submit a competitive offer on a house. Therefore, he or she will help you prepare a fair offer on a home before you submit it.
If a home offer is rejected, a real estate agent can help you alleviate stress. This housing market professional may be able to explain why the offer was rejected and help you plan your next steps in the homebuying journey.
Don't worry if your first offer on a house is rejected – conversely, use these tips, and you can move one step closer to acquiring a stellar residence that matches or exceeds your expectations.
What should you expect after you make an offer on a residence? There are several steps that will take place between the time you submit an offer on a house to the date you finalize a purchase agreement, including:
1. Acceptance or Rejection of Your Initial Proposal
A home seller will have a short period of time to accept or reject your initial offer.
If a home seller accepts your proposal, you'll be able to move forward in the homebuying process. Conversely, if he or she rejects your offer, you may be forced to restart your home search.
On the other hand, a home seller may counter your offer as well. In this scenario, you likely will be given a set amount of time to accept or reject the counter-proposal. Or, you may be able to further negotiate with a home seller in the hopes of finding common ground.
The time between when you submit an offer on a home and receive a home seller's response to your proposal can be stressful. Fortunately, working with an experienced real estate agent ensures that you'll be able to stay up to date. This real estate professional will even help you put together a competitive offer on any home, ensuring that you can boost your chances of getting an instant "Yes" from a home seller.
2. Completion of a Home Inspection
Although a home seller has accepted your initial proposal, you'll still want to conduct a thorough home inspection to identify any major property issues.
For example, if a house has a faulty roof or defective hot water heater, an expert home inspector will be able to uncover such problems immediately. That way, you can learn about issues that may impact the long-term value of a home as part of an inspection.
If you find out about major issues with a home during a property inspection, you can rescind your initial offer and walk away from a house. Comparatively, if you still want to buy a home in spite of problems that were discover during an inspection, you can ask the home seller to complete home repairs or upgrades. You also may want to consider asking for a price reduction if major home repairs or upgrades are needed.
Ultimately, a home inspection will help you make an informed homebuying decision. After a home inspection, the ball is in your court, and you can choose to move forward with the purchase of a home, revise your initial offer or remove your proposal altogether.
3. Relocation to Your New Address
The final step of the home selling process involves closing on a home and relocating to your new address. At this point, all you'll need to do is pack up your belongings from your current location and move them to your new home.
Purchasing a home may seem impossible at times, but the homebuying process often gets easier as it progresses. Plus, homebuyers who collaborate with an experienced real estate agent can receive plenty of support as they navigate each stage of the homebuying journey.
Employing a real estate agent offers an ideal first step for those who want to buy the perfect residence, and for good reason.
With a real estate agent at your disposal, you'll be better equipped than other homebuyers to find a wonderful house at a price that matches your budget. Plus, your real estate agent will be able to help you navigate each stage of the homebuying process.
What should you expect after you hire a real estate agent? Here are three things that will happen:
1. You'll narrow your home search.
What are you looking for in the perfect house? Ultimately, you'll need to narrow your home search to ensure that you can discover your dream residence without delay.
Luckily, your real estate agent will allocate the necessary time and resources to help you narrow your home search. By doing so, you'll be able to move one step closer to finding a first-rate home that you can enjoy years to come.
2. You'll visit a wide range of high-quality houses.
Your real estate agent will set up home showings and keep you up to date about open houses in your area. That way, you can stay on top of the housing market, browse a broad array of top-notch residences and find one that suits you perfectly.
As you browse houses, don't forget to provide your real estate agent with questions. This will enable you to make a more informed decision about how to proceed following a home showing or open house.
Furthermore, your real estate agent wants feedback to guarantee that you can explore houses that correspond to your lifestyle and budget. And if you view a home that fails to meet your criteria, let your real estate agent know immediately. This will make it easier for your real estate agent to find houses that meet or exceed your expectations, and as a result, may help you accelerate the homebuying process.
3. You'll submit your first offer on a home.
If you've reviewed a variety of houses and find a residence that you would like to purchase, now is the perfect time to submit an offer.
Your real estate agent will offer recommendations to ensure that you can submit a competitive offer on a house. In addition, this real estate professional can provide details about how long a home has been available, if a home seller has lowered the price of a residence recently and other factors that may impact your initial proposal.
Submitting an offer on a house can be stressful, but you can always reach out to your real estate agent for support. Your real estate agent will keep you up to date about whether a home seller accepts, rejects or counters your offer. And if you receive a "Yes," your real estate agent can help you take the next step toward acquiring your dream home.
Before you begin a home search, hire a real estate agent – you'll be happy you did. A real estate agent can simplify the homebuying process and help you achieve your homeownership dreams.