Congressmen Leonard Boswell once said “The American Dream is one of Success, home ownership, college education for one’s children and a secure job to provide these and other goals.” This dream is multifaceted, but it starts with the place we make our own; the kingdom we build for ourselves. A crucial life stage, owning a home is the pinnacle of achievement. Despite the 2008 economic crisis which saw foreclosure rates explode to an all-time high, and a continued economic climate that has seen home buying rates trend downwards for a decade straight. Logic would dictate that harsh economic conditions would turn the masses against the financial commitment of buying a home; this is not the case however. A 2012, poll conducted by TD Bank found that 84 percent of respondents claimed to have a “strong desire” to own a home, with half of all respondents calling homeownership “the vital component of the American Dream.”
Currently, there are 35-40 million renters in this country. The 2013, the homeownership rate was 65 percent. Given that the desire to own a home still exists among the general public, it can be predicted that as the economy gets healthier the number of buyers will increase. VA Home Loan Centers has compiled a list of five major home buying mistakes that potential owners should avoid. These faux pas make for lost money, time and heartache.
- Get loan Approval before you shop for a home:
- Don’t give your landlord a notice to vacate too soon:
- Avoid Single Agent Transactions; get a Real Estate Agent that represents you and not The Seller:
- Checking for Insurance Discounts:
- Do Not Make any Purchases Prior to Closing:
- Do not Fall In love with the wrong house:
- Do not Ignore the Resale Value:
Get loan Approval before you shop for a home:
Before shopping for a home, get loan approval first! Too many people make the mistake of putting the carriage before the horse. Call a mortgage broker or lender and get pre-approved, or risk wasting an inordinate amount of time. Ask anyone who has experienced it; falling in love with a home and then finding out you cannot secure financing is a terrible feeling. Have a clear understanding of what loan amount you qualify for.
Call 888-573-4496 for pre approval
Don’t give your landlord a notice to vacate too soon:
With every facet involved in a home buying transaction, do not assume everything is going to go smoothly. Many potential hang-ups and snags can cloud the sale of a home. Do not give your landlord notice to vacate too early in the process. Consult with your agent or loan officer before you give your landlord notice, or potentially wade through a legal nightmare. Not taking the time to thoroughly research all that goes into the home buying process is one of the biggest mistakes first-time buyers make. Knowing all of the what’s and why’s of the purchase transaction can allow you to overcome many potential obstacles to attaining home ownership.
Avoid Single Agent Transactions; get a Real Estate Agent that represents you and not The Seller:
The biggest issue with a single-agent transaction is that the agent is essentially not able to fulfill their financial duty to both the buyer and seller. In this situation the agent has to keep the knowledge of the purchasers negotiating points, encompassing price from the seller while also advising the seller on counter-offers. This is an obvious conflict of interest, particularly because the agent quite possibly will not have a buyer’s best interests in mind. This situation can result in the buyer paying much more than they would if they had their own agent. Remember, the listing price is part of the agent’s commission, meaning a single agent deal being fairly orchestrated may require the agent acting against their own financial interest.
Find the right agent to represent you and only you, and when you do, stick with them. Working with several agents can result in a conflict of interest, or result in agents not dedicating their time to you. Be transparent with your agent about your situation and make sure to provide paperwork in a timely manner. Failure to do so can cause major delays.
Checking for Insurance Discounts:
Make sure that any credits you are eligible for you get. Many people overlook insurance discounts and miss out on cost savings. The most common discount buyers overlook is the multi-policy discount. Combining two policies from the same insurance companies can allow for a percentage discount on each policy, saving you expenses on your home insurance, as well as car insurance (for example). Many insurance discounts are accessible if the policy holder is over a certain age. To cash in on this savings option, do your due diligence.
Do Not Make any Purchases Prior to Closing:
The loan you were approved for was issued based off of your financial position at the time you applied for it. This is not a variable; big changes to your finances could end up negating the loan or home purchase. Ensure that the deal closes by maintaining the same stability until the home is officially yours. Do not make any big ticket purchase, like a car or major appliance. Incurring new credit card debt is a big no-no. If avoidable do not change jobs, pay bills late, open new credit accounts or move large quantities of money between accounts. Remember, the deal is not done until the purchase closes.
Do not Fall In love with the wrong house:
All too often, home buyers quickly fall in love with a property for all the wrong reasons. Do not buy a home based solely off of emotion. Remember, a home is a huge commitment, there are no take backs. When you are buying a home, you are also buying the neighbors, school district, commuting options, local shopping and traffic. This is where you will be living for the immediate future; make sure that the neighborhood is the right fit.
Do not Ignore the Resale Value:
Purchasing a home is one of, if not the biggest financial decision you will make in your life. When purchasing a home, keep in mind the potential resale value that the home possesses. Where is the home located? Is it in a burgeoning neighborhood? What are the neighboring homes like? Are they run down? These are questions to ask yourself when purchasing. Optimally, the home will increase in value over the years. However, no house is guaranteed appreciation. Carefully research the neighborhood that the home is located in before deciding to purchase.
