Many times, buyers fall in love with a home (before they buy it) and are so committed to getting it, they may overlook important details. There are many factors involved, but here are three top mistakes that buyers make while trying to make one of the most important decisions of their life.
1. Ignoring the Expensive Stuff
Paint colors are interior decorating are easy things to change. Unfortunately, those are the things that many buyers concentrate on, rather than figuring out the condition of the most important parts of a home. Replacing a roof, putting in all new windows (or doors), needing a new furnace or air conditioner (or both!), replacing a water heater, or needing a new electric panel – these are important and costly items! Before seriously considering a home, make sure you “look underneath the hood” and figure out how much more money you will be investing into the home in the not so distant future.
2. Not Grasping the Finances
Most buyers have two expenses to consider: out of pocket at the closing table and how much will the home cost you each month. If you’re getting a loan, make sure you consult with the loan officer to get really specific about how much it will cost you on the day of the closing. Sure, putting 10% down on a $200,000 home is $20,000 – but what about closing costs and escrow accounts? Most loans will require another 3-5% out of pocket at the closing table. Secondarily, many experts recommend that your monthly mortgage be no more than 25-30% of your monthly take home pay. Be really honest with yourself about your actual TAKE HOME pay. Your entire mortgage (principal, interest, taxes and insurance) shouldn’t be more than 25-30% of that number. Don’t forget about the extra stuff, things like paying the electric bill, cable, internet, etc. It should all factor into your financial equation!
3. Not Hiring The Right Agent
There are many reasons to hire an agent to walk you through the home buying process. As you decide which agent is the right one for you, make sure you find someone that can at least do two very basic things. The first is being able to provide detailed goes the potential re-sale value look like? Where are the local restaurants and parks? What have other similar homes sold for recently? The more that your agent knows this information right off the top of their head, the better. The second thing your agent should have is the experience to negotiate on your behalf and do whatever it takes to represent your best interests in the transaction. You have the choice to hire an agent, or not to hire an agent. If you hire one, make sure they know how to go to bat for you.