Joyce Crommett's Blog
With so much to think about these days, it is not surprising that some first-time home buyers make mistakes they later regret as they shop for a home for sale. Presented here are some of the most popular mistakes, along with tips to help you avoid a similar fate.
Looking for a home before getting a mortgage
Many first-time buyers make the mistake of seeing houses first before ever scheduling an appointment with a lending institution. In some big markets, housing inventory is still tight, and competition is so frightening. You might discover that you are eager to spend more to buy a property, or lose a property because you are not even pre-approved for a mortgage.
What is the solution to this?
Before you fall in love with that perfect dream house you have been looking at all this while, ensure you get a complete underwritten pre-approval letter. Being pre-approved sends the signal that you are a serious buyer whose credit and finances are ready to get a loan successfully.
Buying a house that your financial muscle cannot carry
It’s easy to fall in love with houses that might make you spend more, but over-stretching yourself can cause you regrets later. It could even put you at higher risk of losing your home if you fall on the unpleasant hammer of hard financial times.
The best way to overcome this issue is to concentrate on the monthly expenses you can genuinely afford instead of looking at the highest loan amount you qualify for. Just because you are eligible for a $250,000 loan, that doesn’t mean you can afford the monthly payments that come with it. Factor in your other financial obligations that do not show on a credit report along with additional home expenses like insurance and taxes when deciding on how much house you can afford.
Emptying your savings just to buy a house
One of the biggest mistakes you can make is spending every dime you have. When you invest all your cash, including your savings on the down payment and closing costs, you set yourself up for disappointment. It will do you no good.
Some people make the mistake of spending all they have saved to make the required 20% down payment, so they don’t have to pay for mortgage insurance. However, they are making a grave mistake as they are left with no savings at all.
Homebuyers who pay 20 percent or more down do not have to pay for mortgage insurance when getting a conventional mortgage. That often translates into significant savings on the monthly mortgage payment. However, it is not worth the risk of living on the edge.
Here comes the solution.Let your aim be to save three to six months of living expenses in an emergency fund. Paying mortgage insurance is not the best, but killing your emergency or retirement savings just to make a sizeable down payment is even more of risk.
Talk to your real estate agent about their mortgage and lender recommendations and get yourself pre-approved for a realistic mortgage before starting your home search.
Shopping for a home is an exciting time for any hopeful homeowner. After weeks of scouring listings looking for the perfect home in the ideal location for you and your family, it can seem like you’ve found the needle in the haystack.
When it’s time to go visit that home, it’s easy to put on rose-colored lenses and overlook issues that should, at the very least, be taken into consideration when it comes to deciding whether or not you should make a bid on the home and how much you should offer.
Today’s post is all about preparing you for that first viewing. We’ll give you tips on what to look out for and how to factor these things into your equation when it comes to making an offer.
Check the listing for omissions
Even if a home looks perfect on paper (or on its website listing), it’s still quite likely that there are things you’ll want to know about before considering an offer. A home listing should attempt to address several questions you might have. But ultimately, it’s main goal is to attract interest in the home.
So, what type of things should be in the listing that the seller might leave out?
Poor street conditions, heavy traffic, and blind driveways are all things that will factor into your decision but most likely won’t be mentioned in a listing
Odors of any kind can be off-putting and difficult to remove. Some homeowners may not even know that their home has an offensive odor if they’ve become used to it.
Room omissions. If the home is listed as having two bathrooms but there are only photos of one, this could be a sign that there are problems with the second bathroom that the seller doesn’t want you to see quite yet.
Top dollar home repairs
A professional home inspection will be able to give you an idea of the kind of money you’ll need to spend on renovations in the coming years. But why wait? When touring a home, ask questions about the last time important renovations and repairs were made.
Roofs, septic systems, and electrical work are just a few of the things that are expensive to repair or replace. If the previous homeowner has a small family or lives alone and you plan on moving in with a houseful of kids, you might find that your impact on the septic and electrical systems of the home are too much for the house to handle. You’ll want to take this into account before considering a bid on the home.
The cost of heating a home in the winter and keeping it cool in the summer can be hefty if the home isn’t properly sealed and weatherproofed. Ask the current homeowner what they spend per month on utilities to get an idea of what you might be spending.
Then, take a look at the windows and doors. Cracks, malfunctioning locks, and worn weatherstripping are all signs that the home will need some work to be energy-efficient.
Don’t ignore the little things
Small fixes may not seem like a big deal when viewing a home. They can even deceive you into thinking that you’re getting a good deal by buying a fixer-upper for a price that’s lower than the market average.
However, it’s important to keep in mind that small fixes around the house are a sign that bigger problems are also being neglected. Don’t be too quick to assume the house will be a good deal before getting it professionally inspected.
It can feel like real estate has its own language. After all, there is a reason agents take courses and need to become licensed!
And for a first-time buyer, I understand that it can be overwhelming and very confusing to keep track of all of this new information on top choosing the home of your dreams and planning a move.
Which is why I’ve created this quick and dirty list of real estate terms every first time home buyer needs to know.
Let’s get started:
A kick-out clause gives the seller the option to continue showing a house after a buyer has made their offer but is slowing down the process with the sale of their own home. The seller can then “kick out” that offer if someone else puts in a more desirable, and readily available, one.
A title-search is simply a search to pull up relevant information to the title of a house. It helps to determine the history of the home and if there are existing regulations in place that affect the property.
Escrow is a neutral third party used to handle transactions throughout the buying/selling process. They hold all related documents and funds until the day of the sale.
Earnest money is usually held in an escrow account and represents your commitment to the sale of a house you have made an offer on. Typically, the amount out down is between 1-3% of the asking price. It is also called “good faith money”.
An appraisal determines a property’s market value. Only a licensed appraiser can pull a report of this information for you. This is the report a lender will use to determine whether or not to lend money to a borrower.
Closing costs are paid at the actual sale of the house. The “closing” is when the title is transferred from the seller over to the buyer. The cost covers all of the fees that were incurred throughout the buying and selling process. A few examples of these fees are the home inspection, appraisal, and escrow.
A comparative market analysis or CMA is a report pulled from a database your real estate agent has access to. This is then used to determine the offering and asking price of homes.
A contingency is when in order to move forward with a sale there are specific requirements the buyer must complete first. Common contingencies are: waiting on an inspection, pre-approval or signing.
Disclosures are required by law. But what are they? A disclosure means a seller has to inform potential buyers of and problems that would affect the value of the property.
Due diligence is doing the work of fully understanding the property you are interested in before buying it. This includes obtaining insurance, reviewing all documents carefully and walking the property.
During a home inspection appliances, plumbing and electrical work are tested. The heating and cooling system are also inspected. This doesn’t affect the monetary value of your home. This is a way for you to determine what state a home is in and if it is worth the financial investment to you.
Looking for a way to make your living room cozier or wanting to add some softer touches to your family room. These great ideas will get you started.
Find your fabric
- Faux fur – check out the furry rugs and pillows available at your favorite home goods stores. You’ll find animal print plush the add some luxe to your leather sofa. Or choose a bright-hued long-haired cushion to add that punch of color to that monotone sectional.
- Real fur – Well … real hair, anyway. A fringed coverlet of llama, lamb, or another high-loft wool brings warmth and texture to any space.
- Velvet or velour, or even fuzzy microfiber or shag adds a softer touch, so think floor pillows, bolsters, or shams.
Wood has natural warmth that adds a subtle glow to otherwise stark contemporary décor. And if you add a touch of antique oak, walnut, or pine into the mix, you’ve created a space with depth and character. So, bring out that side table you inherited, or frame your contemporary print in a simple wood frame. Set the walnut dish your dad carved in high school shop on the mantel.
In addition to wood and fabric, other natural features can warm up your motif. Think a bevy of baskets, dried or faux but realistic willow stems, a cluster of beautiful stones, or even a collection of shells gives character and interest to a design.
Opt for an Ottoman
Everyone loves a place to put their feet. An upholstered ottoman in a comfortable fabric gives instant comfort to the room. If you'd rather have a more durable cover on your footstool such as leather or vinyl, the add a plush throw to it to bring in the warmth.
Sometimes, collections get out of hand, so we’re not talking about taking over every space with your blown glass figurines. But a lovely jar filled with sea glass from your last beach trip puts a warm glow in an otherwise serene bath or bedroom.
Group larger collection pieces in threes. If you inherited Aunt Mildred’s red glass vase, and another blue one from your grandmother, add a third one (even from a thrift store) to give interest to the collection and set it on a sofa table or in the center of the coffee table. Avoid putting more than three (at the very most four) items on any surface to avoid a cluttered, disorganized look.
If you plan to place your home on the market, ask your realtor to recommend a professional home stager to help you add that coveted coziness you crave.
If you intend to sell your house, it pays to get expert support throughout the home selling journey. In fact, if you hire a real estate agent, you can put various home selling myths to rest.
Ultimately, there are many home selling myths that you may hear before you list your house. If you take these myths to heart, you may struggle to prepare for the home selling process.
Let's take a look at three common home selling myths, and the problems associated with these myths.
1. Selling a house is a quick, seamless process.
The process of selling a house often can be long and complicated, particularly for a first-time home seller. Fortunately, if you hire a real estate agent, you can reduce the risk of encountering home selling hurdles.
A real estate agent will learn about you and your home selling goals. Then, this housing market professional will offer recommendations about how to promote your residence to the right groups of buyers and maximize your house's value.
Furthermore, a real estate agent is available to respond to questions at each stage of the home selling journey. He or she will guide you along each stage of this journey, and as such, help you identify and resolve problems before they escalate.
2. What you originally paid for your house matches what it is worth today.
The real estate market fluctuates constantly. Thus, what you initially paid for your house is unlikely to match what your residence is worth today.
A real estate agent can help you evaluate housing market data to better understand how your residence stacks up against the competition. That way, you'll be better equipped than ever before to establish a competitive price for your residence.
Also, a real estate agent may recommend that you complete a home appraisal. This appraisal will enable you to receive a property valuation to help you determine the optimal initial asking price for your home.
3. There is no need to make home improvements, because a buyer will make home upgrades after finalizing a purchase.
When it comes to selling a house, it pays to go above and beyond the call of duty. Therefore, if you complete myriad home improvements before listing your house, you can increase the likelihood that your home will stand out to potential buyers.
Take some time to examine your residence both inside and out. If you identify any major problems, you should fix these issues immediately. Because if you fail to do so, you may miss out on opportunities to stir up interest in your house.
A real estate agent generally can provide recommendations about home upgrades. This housing market professional may even be able to put you in touch with the best local contractors who can help you upgrade your residence in no time at all.
Don't fall victim to the aforementioned home selling myths. Instead, work with a real estate agent, and you can get the help you need to quickly and effortlessly navigate the home selling cycle.