Avoiding the Most Common Home Buying Mistakes
You may have found yourself considering the purchase of a new home
lately, especially considering all of the reports that have been in the
news regarding how many great bargains are available in the existing
market. If that is the case, you should know that there are actually
numerous bargains to be had, but you must tread carefully in order to
avoid making mistakes which could actually cause your bargain to turn
out to be a nightmare.
Perhaps one of the biggest mistakes that a home buyer can make is to not
become pre-approved for a mortgage before they begin shopping for a
home. When you do not make the lender your first stop what frequently
happens is that you will fall in love with a home and then decide that
you must have it, even if you are not sure yet whether you can actually
afford it or not. Keep in mind that pre-approval and pre-qualification
are not the same things. A pre-qualification is a non-binding estimate
that is based only on estimates of your income with nothing actually
verified and usually no credit record checked. A pre-approval is an
actual loan commitment. When you
obtain a pre-approval, you actually sit down with the lender and provide all of the official documentation to
become approved for the mortgage loan. Not only does becoming
pre-approved give you a better idea of what you can afford so that you
can avoid falling in love with a house that you really can't afford, but
it also gives you a stronger negotiating position as well when you are
ready to place a bid on a house.
Additionally, many home buyers attempt to purchase a home without
working with a real estate agent. This can be a huge mistake. The
process of buying a home can be very complicated, especially today. When
you work with an agent you will have someone on your side who can
explain the process, analyze the local market and guide you through the
process (Read more on
why you need to find a realtor before buying a house).
Additionally, you need to make sure that you check on the tax credit.
The First-Time Homebuyer Credit allows buyers who are eligible to
receive a tax credit of $8,000 for homes that are purchased prior to
December 1, 2009. Home buyers can claim the credit on their 2009 federal
tax return and enjoy a reduction of their tax bill, dollar for dollar.
Eligibility guidelines include:
-
The transaction must close by November 30th
-
The home must be the principal residence of the taxpayer
-
The home buyer must live in the home for 36 months following the
purchase
-
The tax payer and his/her spouse if applicable will not be eligible if
either has owned a home within three years prior to the eligible
purchase
When considering the purchase of a home, you should also give careful
thought to all of the aspects of home ownership. Many times, buyers can
become so caught up in the idea of owning a home that they forget about
such mundane areas as maintenance and repairs as well as having to pay
property taxes and homeowners insurance. Also, make sure you consider
whether the home is convenient to your work and the school district you
want your children to attend. Will the house still be your dream home
when you grow tired of the daily commute?
When you are thinking of purchasing a home, it can be easy to become
influenced by the decisions of other people, but this can be a huge
mistake. Remember that it is you that must live in the home, not usually
your friends or extended family members. This means that ultimately it
will be you who has to put up with all of the things that your friends
and family do not notice about the home. Make sure you buy a house that
makes you happy, not others.
Finally, while it can be hard, try to avoid focusing too much attention
on the deal. While negotiating a good deal on a home is a good idea,
remember that finding the lowest price is not always the most important
thing, especially if you plan to be in the home for quite some time.
Remember that although you might find a lower price on a short-sale or a
foreclosure, you will likely also be in store for some surprises as
well (read:
Buyers beware with foreclosures). Sometimes it's better to pay a bit more and be able to settle into
a home you love faster.
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