6 Pitfalls to Avoid When Buying A House

Once you are on your way to homeownership there are certain precautions you will want to take to further minimize your risks.

Once you are on your way to homeownership there are certain precautions you will want to take to further minimize your risks. Here are some tips to make your buying experience a more positive one:

Know what you are paying for upfront. Throughout the mortgage lending process, you will be faced with a list of fees. From origination and escrow fees, to title insurance and property taxes, some may seem inflated while others fall in line with your expectations. You should always question a fee you are uncertain about.

Try to avoid an early pre-payment penalty. Everyone wants to have the flexibility of paying off their 30 or 40 year mortgage early or refinancing when rates go down. The reward is not only owning your house outright but saving on interest charges. Work with a lender who is willing to waive any pre-payment penalties or can offer you the ability to refinance your mortgage at a better rate.

Watch out for the classic bait-and-switch. A lender may try to reel you in with low interest rates, no money down, or no closing costs, only to inform you that you have a less than perfect FICO score. If you feel you are not getting the best rate and loan options, look for a lender you feel more comfortable with.

Don't let real estate agents pressure you to buy. Real estate agents are motivated to sell homes in order to earn a commission. They may convince you the property meets your needs, but you should make the decision without feeling pressured. Remember, the real estate agent works for you and has a fiduciary responsibility to protect your best interests. Always comparison shop for the best rates and programs.

Buy only what you can afford. Stay within your debt-to-income ratios and this can help prevent you from over-extending your debt. Compare mortgage rates and, if necessary, use an affordability calculators to determine the minimum and maximum amount you can afford before going house hunting and stick with your estimate.

Never buy a home on impulse. At some point during your search for a home you may decide to settle for less or get caught up in a bidding war for a house you do not necessarily want to buy. Staying within your budget can be a real challenge, especially if a lender approves you for a higher loan amount then you feel comfortable with. Give yourself time to think about your options and walk away if you feel it is a questionable deal and see how you feel about it the next day.

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Four Things to Know Before Buying a Home

When buying your next home, you might be overwhelmed by the decisions you have to make. Here are four questions to ask yourself when buying your home so you can be better prepared and make a more informed decision.

When you are buying a house, there are many things to consider. Unfortunately, the excitement of buying a new home can cause many people to forget about certain considerations and they often rush into the purchase without being smart about the decision. Before you sign the dotted line, take a step back, breathe and ask yourself the following questions to make sure you are making the right decision.

How Long Do I Plan on Staying?
If you are considering buying a new home, you should plan on staying in it for at least a few years. If you are in a transition phase in your life and you may be moving soon, buying a home right now may not be fore you. The costs of closing and other fees associated with buying a home are enough such that you will lose money on the purchase if your do not stay for a few years and build up equity. However, if you plan on staying in the home for five years or more, it may be a wise decision to buy instead of rent.

Can I Afford This Home?
Being able to afford a new home is more than just being able to make the payments. Your lender may tell you that you can afford the home, but it is up to you to make the final decision. You have to consider the insurance, property taxes, maintenance and utilities that will also need to be paid regularly. Lenders do not generally consider these other costs and they often just look at your income to compare it against the monthly mortgage payments. That is one of the reasons the housing industry fell into the financial crisis that has occurred in recent years.

Is My Credit Good Enough Right Now?
If you have blemishes on your credit report, you may want to consider waiting six months to a year before buying a new home. Take this extra time to clean up your credit and bring up your score as much as possible. You may have a score that qualifies for a mortgage loan, but raising your score will help you qualify for a reduced interest rate which could save you thousands of dollars over the term of the mortgage.

Does the Area Have Good Schools?
Living in an area that offers good schools is great for two reasons: Your children will get a good education and it is a great selling point if you decide to move away. That second reason is why you should try to find a home near good schools even if you don’t have kids. For most families, living in a good school district is the top deciding factor when choosing a new home.

Five Tips for Beating Buyers Remorse

Buying a home is a great experience, but it can be an overwhelming experience. As a result, some home buyers have a sense of buyer's remorse for a little while after the purchase.

With the first time homebuyer’s tax credit ending last week, loan applications for mortgages were up by nearly 10 percent over the last couple months. This shows that home buyers were hoping to hurry and beat the deadline so they could take advantage of the credit as well as the low mortgage rates by purchasing a new home. But did some of the buyers rush into something that they did not really want? Are they going to look at their new home and wonder what they got themselves into simply because they rushed to make it happen? If this sounds like you either today or in a few months, here are some tips to help you beat buyer’s remorse.

1. Make your home your own. This might sound like a no-brainer, but one way to beat buyer’s remorse is to decorate your new home the way you want to decorate it. Don’t worry about how it’s “supposed” to look, just make it unique in such a way that it fits your personality and your lifestyle. It’s your home and you can do what you want to with it as long as it fits within the confines of your particular housing association (assuming that you bought a home in a housing association).

2. Stop dwelling on it. If you have bought a home and you are unsure if you made the right decision, just move on. Whether you made the right decision or not is a moot point because now you own the home. Stop dwelling on what you should have done and make the best of your new investment.

3. Have a housewarming party. By inviting your family and friends to your new home, you will feel like you accomplished a great task. You now have a beautiful home where you can entertain all of those people who are close to you. Planning for a housewarming party will also motivate you to clean up your new house and make any repairs beforehand. When you see your home’s full potential, you will be excited about being the new owner of it.

4. Mingle with your neighbors. The more friends you make in the neighborhood, the better you will feel about living in your new home. Invite them to your housewarming party so you can introduce yourself and your family. Wave to them when you see them outside. Bake some cookies and go door-to-door when you first move in to introduce yourself. Bring the family along and introduce them as well. There simply isn’t enough of that in today’s society and once your neighbors get over the initial shock, you will probably become great friends with them.

5. Think of the positives. There are many great things about owning a home. It is a sense of accomplishment. Owning your home allows you more freedom. Owning your home gives you more space. It also makes you feel more grown-up. Focus on these attributes and your buyer’s remorse will soon disappear.