8 Common Mistakes of First Time Homebuyers

1) Look for a house without knowing if, and for how much, they qualify.

Many potential buyers drive around a neighborhood they would like to live in and come upon "the home of their dreams" only to have their dreams dashed when they find out they don't "qualify" to buy it. Qualifying for a home loan means more than just having a down payment, a job, good credit, and reasonable monthly debt. The educated buyer doesn't find a house first; first, they find a loan that suits their individual situation. Being pre-qualified means a loan officer has evaluated your job security, income, debt, credit history, and cash available. Once a buyer is pre-qualified, they know the maximum they can spend and aren't wasting their time looking at a house they can't afford. There is usually no cost for pre-qualification and this simple step can save a buyer thousands. Sellers are much more inclined to negotiate with a buyer who they know can actually get a loan!

Scott's Notes...get prequalified!  Click here to get prequalified with no obligation.

2) Fail to determine the maximum monthly payment they want to make.

Loan options are many and varied, yet they all have one thing in common...a monthly mortgage payment--the check you will write every month, and in most cases for thirty years. Before you buy is the time to consider the most you want your monthly mortgage payment to be. Before you have become emotionally attached to a specific house with a payment higher than you can comfortably live with, or can qualify for. To help you make this decision, you will want to take into consideration the tax savings and benefits of home ownership, as opposed to throwing your monthly rent away.

Scott's Notes...be informed!  Click here to set up a time that we can talk.

3) Listen to "well-meaning friends" instead of professionals.

While your family and friends have the best of intentions, it is better to seek the advice and council of real estate and mortgage professionals. Your friends may have purchased one or two houses in their lifetime, whereas a professional has completed hundreds or even thousands of transactions. The loan your friend used eight years ago may not even be available anymore. The income limits and credit guidelines may have changed substantially since they purchased their home. Because loan programs, and the real estate market, change frequently, it is always best to consult a professional.

Scott's Notes...I am up to date with market trends, mortgage rates and programs, and I would be happy to represent you as your "Buyer's" agent.

4) Fail to review their credit report.

Before applying for a home loan, it is a good idea to review your credit report with one, or better yet, all three of the major credit reporting companies; Experian (TRW), Trans Union, and CBI Equifax. A lender will review all three reports during the loan process and some will help you correct errors, minor problems, and help explain or even remove derogatory information. Most people have never seen their credit report and are unaware that mistakes appear on up to 60% of them. Reviewing your report ahead of time may save you time, money, or both.

Scott's Notes...Don't get just one!  All 3 reporting companies review your credit differently.  Also, don't just rely on what your mortgage broker is telling you. Without being informed it is easy for an unscrupulous mortgage broker to take advantage of your credit past.

5) Make an offer without representation.

Many buyers shy away from Realtors because they believe the Realtor will cost them more money. Typically, it is the seller who pays for the Realtor, not the buyer. The seller will usually pay his agent, the listing agent (the name on the sign on the front lawn), 6% of whatever the house sells for. If the buyer has his own agent, his agent will "split" the 6%. The buyer doesn't pay his agent - the seller does!

Scott's Notes...Use a Realtor (preferably Me)!  It costs you nothing, but will in many cases help you get the home you want for less.

6) "Fall in love" with the first house they see.

Buying a house is usually an emotional, as well as a financial experience. Whether it's a white picket fence, a walk-in closet, or a work space in the garage, it's easy to get hooked. Make sure you comparison shop, and let your Realtor help you in this area. Realtors are aware of the market, they know value. Most importantly, they will tell you what similar houses in your area have recently sold for and help you make a realistic offer. Shop 'til you drop! You shopped for your TV, didn't you?

Scott's Notes...Look at all Comps!  I would be happy to pull up all comps in any area that you are looking in. Just give me a call or click here.

7) We can't buy now, we don't have enough savings or enough income.

Not being aware of all the various mortgages that are available with a very small down payment or with little or no closing costs, or assuming your income is too low is a mistake potential homebuyers make when they could have been in the market now.

Scott's Notes...$0 down is now pretty common!  There are some terrific creative financing programs available now.  Click here to see a few of them.

8) Passing on a good home because it isn't perfect.

Make a wish list of features and prioritize which ones are really important to you such as a neighborhood, parking space, room size, etc.. Be specific about what you want and really need. Look at the possibilities for adding the things you want later.

Scott's Notes...Waiting for the perfect home may mean missing on a really great home !  The perfect home is a myth...think of any home where you would move in and not change a thing.