1. Not knowing how much house you can afford.
So many first time home buyers spend most of their time researching homes, comparing kitchen layouts, and measuring out the back yard. Unfortunately, they spend very little time researching their financing options. One of the first things that buyers should do is consult a qualified mortgage broker. Without knowing how much house you can finance, you waste a lot of time looking at homes that are out of your range and you may fall in love with a home that is out of reach.
2. Assuming bank owned homes are great deals.
Just because the previous owner bought the home for $450,000 3 years ago, doesn’t mean it’s worth that much now. Values have dropped significantly and you may not be getting the bargain you think with a bank owned home. An agent who is experienced with REO’s should be able to guide you with this one.
3. Letting the seller know that you just fell in love with their house.
No matter how much you like a house, don’t tell the seller’s agent. As a matter of fact, don’t ever talk to the seller or their agent. Little slips can cost you thousands of dollars. Let your agent do the work. (See tip #4.)
4. Buying without an realtor or using an inexperienced agent.
Buying a home without representation or using an agent who isn’t experienced can cost you thousands of dollars and can actually put the entire transaction at risk. A good agent can get you in contact with a trusted and qualified mortgage person who will make your financing effortless. (Well, ALMOST!) Experienced agents know what you can ask for when purchasing a bank owned property and what might blow the deal up. Use the best agent who you can find! It is free to you. The seller pays the commission for the buyer’s agent.
5. Underestimating the costs of home ownership.
Maintenance of any home is a must. Everything from landscaping to kitchen appliances will need maintenance at one time or another and it costs money. Assume that you will need up to 1% of the amount that you pay in mortgae to keep things running smoothly.
6. Failing consider property taxes.
The only sure thing in this world is death and taxes. You taxes will be a factor when your loan goes through but the underwriters won’t be checking on any tax increases or special assessments that may be planned. Do your research and be sure that you are comfortable with the future tax rate for your new home.
7. Assuming your first offer will be the sale price.
As a general rule, homes in the first time buyer’s price range are in higher demand than the rest of the market. Competition heats up for the more desirable homes. Never assume that any offer will be accepted and do not to get discouraged if you lose out on the first house you make an offer on.
8. Waiving the inspection.
Hire a professional inspector. Buyers who waive their inspection contingency to save money are gambling with their financial future and the future of their home. Even new built homes should be inspected before closing. Bank owned homes are usually sold “as is” but the inspection contingency gives the buyer the option to rescind their offer if there is something seriously wrong with the property. It will be the best $300 you ever spent!
9. Failing to include a financing contingency clause in the contract.
A good agent will never let this happen so it is a good example for tip #4. A mortgage financing contingency protects you and your earnest money if you are unable to get financing for you new home. Without this clause, you can lose your earnest money and, worse yet, still be obligated to buy the house.
9.5 Not calling we Hall to get your search started!
One of our specialties is finding starter homes for first time homebuyers in the Vancouver Washington area. Call us for a free list of bank owned starter homes and short sale homes that we have compiled for first time homebuyers. Not calling us could cost you thousands of dollars on your purchase. Go here to see how we have helped our recent clients.