Buying a real estate is one of the most expensive purchase one can make in his entire life. It is also a capital intensive investment. That is why having a mistake in this type of transaction can be costly. The following are the usual mistakes real estate buyers make.
- 1 Trying to fix your credit history right before buying
- 2 Do not consider plans when buying.
- 3 Looking for a property before securing financing
- 4 Not shopping around for other lenders
- 5 Assume that a Good Faith Estimate is what you pay at closing.
- 6 Failure to budget the costs of ownership
- 7 Skipping the home inspection
Trying to fix your credit history right before buying
Buyers may be in trouble if they do not consult an expert in finance before acting on their own. “Even canceling part of the balance of their accounts, which is good regarding credit score, could be negative if you lose your liquid assets which may need to qualify for the loan."
To get the most favorable rate on loan, you need to have a solid credit profile. That means a credit score of at least 740. Recently, if your score was 740 and you requested a fixed amount of $ 300,000 mortgage for 30 years, you could qualify for an interest rate of 3.75%, with monthly payments of $ 1,389. If your score is under 680, the best national rate you can find will be 4.25%, with a monthly payment of $ 1476 for the same loan. During the term of the loan, you"d pay $ 31.130 more. Do not wait until the last minute to check your credit reports and make the necessary changes to improve your profile.
Do not consider plans when buying.
Buyers should consider that a property is not an electronic gadget that they will only use for one or two years. A real estate property can stay with a family for the next 5 to 10 years or more. If they plan to increase their family, they may need a bigger house and maybe a different location concerning schools. Also how long they plan to live and what type of mortgage is best for your budget.
Looking for a property before securing financing
In the current market, buyers should be qualified for a mortgage before heading out to look for the property. The most important thing is to know your buying power. The time to decide on the mortgage is not ten days after signing a contract. Sellers will not take you seriously if you don’t have a pre-approved loan. You are also required to provide proof of loan pre-approval or financial statement showing that you can pay by cash.
Not shopping around for other lenders
When it comes to acquiring that mortgage, being faithful to your bank could always have an expensive result. Inquire from several lenders, including banks and credit unions. Even though your real estate agent provided you a recommendation, look around for other options as the mortgage broker might be more interested in selling a mortgage than getting you the best bargain.
Assume that a Good Faith Estimate is what you pay at closing.
How mortgage brokers provide the “good faith estimate" it is not written in stone. Closing costs for the transaction may be higher; buyers need to be prepared. The “closing costs" generally range from 3% to 5% of the mortgage balance. It"s good to get the “Good Faith Estimate" provided by two or three mortgage brokers from different companies, if there are major differences, then you should ask why and after a clear and convincing explanation, determine a good choice. It is not enough to calculate the monthly mortgage. You should also include closing costs and any additional costs you will owe. Many of the fees are negotiable, such as the inspector fees, the cost to research the title and Jacksonville real estate lawyer.
Another important service you need to get and should include in your budget is hiring a title company. That company will protect you by making sure that the land title is valid and it doesn’t have issues. That is why it is important to hire the best Jacksonville title company.
Failure to budget the costs of ownership
Budget buying a house is not for all new buyers. Your house could squeeze your budget if you do not calculate the costs of maintaining the property. A new owner must have the budget for services, future maintenance, and repairs such as roof and paint. Find out how the current owner pays for services, taxes and other monthly expenses, to know for sure whether or not you can afford the property.
Skipping the home inspection
One of the biggest causes of regret among buyers are people who do not make a home inspection and then discovers that the house had big problems. You want to be present during the inspection to find out any costly repair you need. You will obtain basic information about the house, such as where to find the electrical panel or the stopcock to cut the water. A home inspector can also indicate repairs you need to conduct in the coming years. To find certified home inspectors in your area, visit the website of the American Society of Home Inspectors.
Following these steps will give you the opportunity to buy a house, get to the closing table without surprise and are comfortable with payments within your family budget. Given the important details described above, you will be able to have a smooth transaction and will let you enjoy your house without any worries.