San Diego Union-Tribune (Sunday)
7 first-time homebuyer mistakes
1. Not getting preapproved before looking at houses
Having a preapproved mortgage makes life easier when you're shopping for a home. First, it tells you how much you can afford. That piece of paper also makes it clear to sellers that you're a serious buyer and, when you've made a decision and your of fer is accepted, it speeds up the paper work.
2. Looking for a home when you already have significant debt or little savings
“Having substantial debt when looking for a home limits a buyer's spending ability,” said Charrel
Sanabria, a real estate agent with Realty One Group in Emerald Coast, Florida. It means getting a higher interest rate, which reduces buying power. “It is so impor tant to eliminate as much debt as possible before looking to purchase a home, as it will reduce their DTI [Debt to Income Ratio] and allow them to purchase a home in the price range they desire. Coming into the process with lower debt is a way to cut down on the stress of buying a home.”
3. Failing to research programs that assist with the down-payment.
Saving up for a down-payment isn't easy for many firsttime buyers. But there's help out there in the form of state and local government grants and no-interest loans that buyers may qualify for. Take the time to research programs that you may be eligible for. Among the resources to check out: your real-estate agent and the Depar tment of Housing and Urban Development (hud.gov).
4. Accepting the first loan offered/not shopping around for a mortgage
“Accepting the first loan offered to a buyer from a mor tgage lender can cause them to overpay on their home loan,” Sanabria said. Shopping around for a mortgage can save you money. “Key things to look for are the interest rates, mor tgage fees, down payment options, and what ser vices they of fer you as a customer,” she said.
5. Buying a house that’s at the top of your loan amount
Though it may seem contradictor y, lenders may approve you for a mor tgage that's more than you should realistically spend. It's up to you to look at your income and figure out how much you spend on other monthly expenses, such as taxes, car insurance and groceries.
6. Using all your savings for a down payment and closing costs
Don't drain your bank account. “Coming out of the homebuying process with no savings is not an ideal situation,” Sanabria said. Leave some for unexpected expenses once you've closed and moved in. “My advice would be to have two separate savings accounts. The first account would be for home expenses, and the second would be for personal savings.”
7. Failing to get a home inspection
A home inspection is a way to discover or ensure a home’s health by doing a thorough check of the bones of a house including the roof, plumbing and foundation. Some lenders don’t require an inspection, which some buyers see as a way to save money. But you shouldn’t skip this important step. If serious problems are found, the seller may be required to fix them before the sale goes through, or you could negotiate a lower purchase price. Without an inspection, fixing the problem becomes your responsibility.