Preparing to Buy a House – 7 Mistakes to avoid
1. Not being prepared financially
Adulting is tough! Buying a home is not for lightweights. You’ve got to get serious and prepare yourself financially for the journey to Home Ownership! Here are 3 quick tips:
- Make the largest down payment possible, 20% if you can.
- Have an emergency fund saved that’s about 2-3 times your monthly expenses. DON’T use this to cover your Closing Costs!
- Understand and make room in your budget for all the “extra” costs of owning a home including: water/sewer/garbage, electric and gas bills, home maintenance, landscaping, HOA fees, internet and cable, etc…
2. Shopping before getting Pre-Approved by a local Mortgage lender
It’s tempting to just jump on Zillow and start looking for a home, but DON’T DO IT! Get your finances in order first and then talk to a good, local lender. They’ll let you know if you need to correct your credit score or anything else before shopping for your home.
3. Looking for a “unicorn” property
Especially when purchasing your first home, keep your “must have” list short, only 5 must haves! You can keep a longer “wish list”, but in Bend’s fast moving housing market, you’ll be shooting yourself in the foot if you try to find that “perfect” property. You’ll end up not buying anything and then….missing out on the equity you could have been building.
4. Using the Seller’s agent as your agent
Why do this when you can have you own BUYER’S AGENT working for you, negotiating for you at NO COST TO YOU! ***Typically the Seller is going to pay the Buyer’s Agent’s commission. One exception might be if you decide to purchase a “For Sale By Owner” property, you Buyer’s Agent may ask you to pay part of all of their commission. It will depend on what the FSBO Seller offers to pay your agent.
5. Forgetting about Closing Costs
When buying a home it usually feels like your wallet and your bank accounts are BLEEDING MONEY! You’ll need to plan ahead for about 1% – 3% of the price of your home for closing costs. These will be paid at the end when you “close” your transaction, but you should have this money ready to go from the beginning. Sometimes your agent can negotiate the Seller to pay some or all of your closing costs, but that is RARE in the current market conditions where Seller’s have the advantage and Buyers are competing for homes.
6. Not Reading the entire Real Estate Contract
Always read the entire contract your Agent writes for you! Real Estate is probably the largest purchase you’ll even make and you’re legally obligated to make good on the contract you’re signing. So please, please, please READ IT before you sign it. Ask any questions, no matter how silly they seem. The contract is between you and the seller, the agents are not parties to the contract, so be sure you understand everything before you agree to it.
7. Thinking the Seller is “out to get you”
The Seller is not out to get you! They want to sell you their home and get to the closing table, the same as you do. Patience and a whole lot of putting yourself in their shoes will go a long way to getting everyone to the finish line in a good mood and with a good result!
Nothing said here is meant to scare you away from buying your first home! I encourage you to start the process by looking at your finances and getting prepared. I specialize in helping first-time home buyers make it through the process. You won’t fail with me on your side!