HOME BUYING MISTAKES YOU NEED TO AVOID
Buying a home can bring a high level of uncertainty. There are many steps to buying a home and some buyers are unaware of these steps. Please always have a Realtor on your side.
Home buyers who are unaware of the home buying process often open themselves up to making some bad mistakes. Mistakes that can cost themselves thousands of dollars, hours of frustration, or even worse, heartbreak because they’re not able to buy the home. Those who understand the most common errors will greatly improve the chances their home purchase is a success.
Mistake #1: Not Getting Pre-Approved
The first thing you’ll notice about mistake #1 is the word, “pre-approved.” As you’re preparing to buy your home, you may hear the word “pre-qualification” being thrown around. You need to first understand there is a difference between Pre-Qual and Pre-Approved and also the highest rating will be an Underwriter Approval.
A mortgage pre-approval is when a borrower’s “turns in” all their financials to a mortgage lender or bank to evaluate the likelihood of getting a mortgage. A pre-approval will typically require important financial documents such as tax returns, recent pay stubs, and bank statements.
A mortgage pre-qualification is a “general look” at a borrower’s financials by a mortgage lender or bank to evaluate the likelihood of getting a mortgage. The biggest difference between a mortgage pre-approval and pre-qualification is that a pre-qualification is often issued based on information that is provided by the borrower. This means that a buyer can provide a mortgage lender or bank with financial information that might be incorrect, which can ultimately lead to the mortgage being denied once the important financial documents are submitted to the lender. With Pre-Approval the paperwork has been provided and verified by the lender.
Now that we’ve briefly cleared up the difference between a mortgage pre-approval and a mortgage pre-qualification, one of the worst first time home buyer mistakes is not getting pre-approved for a mortgage. It’s vital to the success of buying a home that you put yourself in the best position to succeed, especially if it is a Seller’s Market. A mortgage pre-approval places a buyer in the best light in the eyes of a seller because the chances a mortgage is granted is greater when a buyer has been pre-approved than it is when a buyer has only been pre-qualified.
There are many mortgage brokers out there, pick one that you can trust, and you can get quotes in writing. I would start with your local bank and interview at least 3 lenders to see who has the best loan for you. Selecting a local lender will give the seller more confidence over an on-line lender. PLEASE select your mortgage broker or lender carefully.
Mistake #2: Not Taking A Buyers Agent Seriously
The most important person you’ll be relying on for guidance during the purchase of your home is your real estate agent. First and foremost, it’s critical that you understand that not every real estate agent are the same. This means, even if an agent works for the same company, they’re not the same. If an agent works on a team, they’re not the same as other team members. While it’s possible that a friend or family member is a competent and successful real estate agent, it isn’t always the case. Since buying your home is such a big deal, it’s critical you select the right agent. In most cases in California, Buyers Agent are no charge to you have their expertise guide you for free.
Buying a home is a huge deal and ensuring the agent who is guiding you through the process is extremely important. Not taking the process of selecting the right agent is a huge mistake.
Mistake no. 3: Going Directly with the Listing Agent
There are many home buyers who wonder if they should use the listing agent to buy the home. The simple answer is, NO, you should NEVER do that. Going directly to the seller’s agent is one of the worst home buying mistakes for several reasons. One of the main reasons why going directly to the seller’s real estate agent is a bad idea is because it’s possible you’re foregoing your right to have representation. If you decide to go directly to a listing agent, it’s likely that you’re going to be entering a dual agency situation which is when a real estate agent is “representing” both the buyer and seller.
The problem is that when an agent is a dual agent, they cannot provide any advice to you as to how much they feel the home is worth or how to negotiate repair requests after a home inspection. For this reason, dual agency is not legal in many states so be sure to know your state laws on dual agency. California allows dual agency, so it is up to you to understand the issues that it can cause.
Keep in mind, the listing agent works for the seller and promises to get them the most money in their pockets. The sellers pay the commission so you work hard for whoever pays you, Right.
Mistake no. 4: Forgetting About Additional Expenses
When buying a home, it is important to understand how much it will cost to buy and how much it will cost to own. Forgetting to factor in additional expenses of owning a home is another one of the common home buying mistakes.
You’re probably asking yourself what additional expenses of owning a home should you be factoring in? Well, there are actually a few expenses such as monthly utilities, property taxes, homeowner’s insurance, and general maintenance expenses are some of the most common.
Buying a home at the top of your budget and forgetting to factor in these expenses of owning a home can add some serious financial stress. Create a spreadsheet with estimated home ownership costs and monthly expenses can help you budget and also help ensure you don’t buy too expensive of a home.
Many home buyers struggle on how to determine how much to offer for a home once they find one they’re in love with. One way to embarrass yourself when making an offer is to believe the home values you see online. Giving online home value estimates too much clout is another one of the top home buying mistakes you need to avoid.
It’s likely you’ve heard of websites such as Purple Bricks or Zillow. These websites provide home value estimates that are calculated by a computer using an algorithm. Sometimes “Zestimates” can be too high or too low by as much as 50%. This means that Zillow may estimate a home is worth $100,000 but the home sells for $200,000.
Putting too much weight on online home value estimates can end up costing you time and the home you love. When you’re ready to make an offer on a home that you love, it’s recommended you discuss with your real estate agent. An experienced buyer’s agent will be able to provide helpful data and information about recent comparable sales so that you can understand what a realistic market value is on a home.
Mistake #6: Skipping the Home Inspection
As you’re beginning the process of buying your home,
one of the most important steps in the process is the inspection phase.
mistakes and there are very few reasons why you should ever consider doing so.
First, the inspection is an excellent way to protect yourself from buying a home that’s going to end up being a money pit. One of the primary reasons a home inspection is highly recommended when buying is because a quality home inspector will be able to identify deficiencies within a home.
For example, a home inspector may uncover during their inspection that there are significant structural issues or there is mold present in a home. These are just a couple of items that an inspection can avoid the possibility of you spending thousands of dollars correcting deficiencies!
Mistake #7: Making Large Purchase Before Closing
Another big mistake. Whether you’re buying your first home or your second home, making a large purchase before closing can stop the process. Lenders will look until the very last second to see if you used your credit card or savings for a large purchase. This can jeopardize you getting a mortgage. Once you’re approved does not guarantee you’ll get the loan. Too often a buyer will get a new credit card or a shiny new car just prior to closing which can result in getting denied on your loan.
You’re not guaranteed to get your mortgage, even if it’s been pre-approved, until you’ve signed all the closing documents and have the keys in your hands. Bottom line, don’t make any changes to your financials unless you’ve discussed it with your mortgage professional.
Buying a home is a very exciting and stressful time. It’s important that you don’t let the excitement result in you falling for one of these common home buying mistakes. As you’re going through the process of buying your home, if you have any question as to whether you’re making the right move or not, don’t feel embarrassed to ask your real estate agent, mortgage originator, or attorney. The worst thing is making one of the above home buying mistakes and not being able to buy a home.
Are you buying a home in San Diego? If so, the above buyers mistakes must be avoided at all cost! Making these mistakes can potentially lead to a disastrous experience. If you haven’t found a Realtor in San Diego, contact me as I’d love the opportunity to interview for the job of assisting you through your home buying process.
We have been serving San Diego and the Coastal Communities for over 44 years and Today is Your Turn. Located in Pacific Beach and serving surrounding areas of La Jolla, Del Mar, Ocean Beach, Solana Beach, Cardiff by the Sea, Encinitas, Imperial Beach, Clairemont, UTC, Carmel Valley, Mission Valley, Linda Vista, Old Town, Point Loma, Kearny Mesa, et cetera.
Dunn, REALTORS – 4538 Cass Street in PB
Open 7 days a week 9 to 5
Agent Josie Sarullo at 858-274-3866 ext. 256