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First Time Home Buyers: Beware of These 4 Mistakes!

If you are thinking about making the biggest investment of your life here are some helpful hints to make sure you don’t make a mistake. It’s difficult when dealing with your money and not make a mistake and lose it all. When buying a home facing so many people whom you don’t know and have never met before is an everyday occurrence. Yet you are expected to trust them and do what they say without question.

The fact is you will have to trust people when buying a home. However, you can do some ground work to protect yourself to some degree. Below you will find four mistakes I have found that first time home buyers tend to make . Armed with these 4 mistakes you will be able to go forward and buy a home knowing you have had a say on the last results.

 1.    Most first time buyers fail to realize that buying a home is a process. It is not an event like the “Super Bowl”. There are certain steps which need to be taken before even going out and looking at homes.

The first step is to get your finances in order. By supplying the past two years of your tax returns, last two weeks of your pay stubs, and copies of your bank statements for the past two months to your lender of choice you’re on your way. Once done you will ask for and receive a “pre-approved” letter from your lender.

You may think walking into your bank’s branch office is the right thing to do, however, that is not be your best choice. You see, Bank branches do maybe one real estate loan a month while a good loan broker or wholesale bank representative will do 30 loans a month. Who do you think has skills honed better? So get pre-approved in writing then begin to look for your new home.

 2.    When you walk through a home and you like it and want to buy it your eyes may be glasses over with the thrill of owning your own home. This is good; it’s a natural part of the home buying process. However, you need to keep focused on making sure you are buying a home that is a “Money Pit”.

Get all the inspections that is standard in your area. Property Inspections, Pest Control Inspections, and any other inspections referred to by any inspector from your other inspections. Some extra reports I have seen are a roof inspection or pool inspection.

Read all the inspection reports cover to cover. Use them as a guideline to help you make an informed decision as to whether to continue with the purchase of this home or not.

If you don’t understand anything you have read in any report and your agent has not been able to help you with their knowledge then seek out the advice of people you know and trust. One good resource is calling the inspector of the report.

3.    The thrill of purchasing a home is a great feeling and one that should always be cherished and enjoyed. Sometimes a first time buyer forgets there is more to buying a home than besides the basic need of shelter. You may stay in this home for a lifetime. You may sell it in only a few years.

In any case you need to do your due diligence. Find out all the information you can about your new home. Discover what may have an adverse effect on your new home or a new buyer you want to sell your new home to in the future. A good test is to look at a home purchase from the prospective of a homeowner wanting to sell this home, be the seller.

Check out the schools; are they what you want for your child? How about a new buyer’s children? Are there any environmental issue? Read your environmental reports so you know recorded information like; was your new home once a gas station or a place where toxic substances were once used, such as underground gas tanks?

Check with the town building department about any new developments that may be planned that would lower the price of your new home. In the future, some first time home buyer may be able to buy a NEW home for the same price you would be asking for your home.

Finally, check out the competition for your new home. Is there a home of better quality and site that may be lower in price or at the same price as the home you are considering to purchase? Ask around town like at the Chamber of Commerce if they know of any local business projections like a major job hiring that would bring more people into your new neighborhood and make home prices go up in value.

 4.    First time home buyers don’t know there are extra costs involved in purchasing a home. Some expenses are called fixed and others are one-time expenses. In either case it is good to know what costs you will incur before you get to the closing table at the escrow company.

Fixed expenses are: Principal, Interest, Taxes, Insurance, Impound Accounts, and Payment Mortgage Insurance. Your one-time expenses, which can be thousands of dollars, are Title Insurance, ALTA Insurance, Escrow Fees, Notary Fees, Processing Fees, Points on your Loan, Inspection Report fees, Appraisal fees and for the fun of it…buying fees. (I call them junk fees.)

No there aren’t buying fees but there may be fees I have not mentioned here that someone may come up with during an escrow period. They usually come under the heading of processing fees or review fees. They are just another way to pass on costs to the consumer. They are not nice but they are the part of life.

These are the First Time Home Buyers: Beware of These 4 Mistakes! These 4 mistakes are not indicative to only first time home buyers. Home buyers in general no matter how many homes they have purchased make these mistakes. Be forewarned and understand the home buying process has its challenges but in the end buying a home can be an experience you will remember for a lifetime.

Your brain will store memories of families, of holidays together, and the many parties you had. Those memories will make you smile throughout your whole life. Most importantly, if you treat your new home, like something that provides you shelter and not an ATM. Your home would be an investment, which is something that can bring passive income to you. This will bring you a life, a bit better and easier for you to enjoy during your later years.

Remember, Cliff Keith and Team is always here to help you increase your net worth and prepare for the future through real estate and all the good aspect of home ownership. Call us today at 650-346-7366. You will be glad you did.

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