Don’t Make Common Buying Mistakes

The market is picking up! With home prices down and inventory up, it’s a buyer’s market and the buyers are coming out of the woodwork. The tax credit has been bringing in first-time homebuyers and the lowering prices have started bring in retirees again. The Florida market is finally looking up.

But unfortunately, with so many new buyers looking to take advantage of current conditions, many people will make simple mistakes that could cost them later. Here are a few of the most common ways to avoid typical home buying mistakes.

-Know What You Want
The most important thing to do before you start to look at houses is to determine exactly what you want and exactly what you can afford (note that these often aren’t the same thing). First, go see a lender and find out exactly how much house you can afford. Once you’ve done that, start making a list of things you need in your new home and things you want. Armed with all of this information, have your Realtor pull up only properties that match this criteria. Whatever you do, don’t look at homes outside your price range, even just for fun. It will only make the more affordable homes less attractive and harder to choose.

-Find Out Your Credit Score
Do you know your credit score without looking? You should before you start looking for a new home. The lower your credit score, the more it’s going to cost you to borrow. Fannie Mae and Freddie Mac start charging higher fees for borrowers with a score less than 740. If you have a lower score, you should definitely work on getting it as high as possible before looking for a new home. You’ll be better off in the long run.

-Don’t Make Any Big Purchases
Did you know that opening any kind of new credit account automatically drops your credit score? This includes opening up a new credit card account or even buying a car. Your lender will be watching your score very closely until the moment you’ve closed on the new home and if they see any dramatic changes they may put an end to the whole deal. Wait until after your home is closed to take on any other big purchases.

-Don’t Skimp on the Home Inspection
Everyone wants to save money. Everyone wants to cut corners whenever possible. Unfortunately, many buyers make the mistake of skipping the home inspection to save money. True, you may pay for a home inspection and the inspection will find nothing at all, but the risk is worth the money. Oftentimes the seller will cover the cost of any repairs necessary and if not, at least you know what you’re getting into. Finding a big problem after you’ve closed on the home can end up being much, much costlier than an inspection would have been.

-Make Sure You Have a Way Out
When you sign a sales contract on a home you’ll be required to put some money down as a deposit. This money is nonrefundable if you decide to cancel the deal on a whim. However, most contracts contain clauses that allow you to get your money back if certain common problems arise. You should always make sure you can walk away with your money if you fail to receive financing or if the home inspection turns up a big problem with the home. Many sellers will try to keep these clauses out of their contract so they can keep your money no matter what. Don’t let them.

-Budget For Insurance
Your financial responsibility doesn’t end at the sale and the mortgage. You’re also going to want to insure your new home. Make sure, before you buy, that you find out how much it is going to cost you to insure your new property. This is a cost that you will want to have budgeted into your plans ahead of time.

Just keep in mind that buying a home is likely the most important financial decision you will ever make in your life so it pays to take your time and be cautious with it. Read and understand everything before signing. And if you don’t understand anything, make sure you get your answers from someone you can trust. Be careful out there!

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