| Click on our Advertisement |
|
|
Interest rates are low, making this a great time to buy a home. But it's not the right time for everyone. Before forging ahead, review the common home buyer mistakes listed below.
It's almost always a mistake to buy a home if you anticipate having to sell again soon. There are exceptions, of course. In some areas, home prices have increased so much that buyers who bought only a year ago can sell today and realize a profit.
Few analysts expect home price appreciation to continue at its present rate. The National Association of Realtors predicts an appreciation rate of about 4 percent nationally next year, compared to about 6 percent this year. Some economists predict that prices will soften, perhaps significantly in some places.
HOUSE HUNTING TIP:
No one knows for sure where home prices will be a year form now. Even though over the long run, the trend has been upward, home prices in your area could go up, down, or nowhere next year. Let's say home prices level off, and you have to sell soon after buying. If you list your home with a real estate broker and sell for the same price you paid, you'll lose money after paying selling costs (usually about 6-8 percent of the sale price). So, it's wise to put your home buying plans on hold if you plan to relocate again soon.
A common home buyer mistake is to start your house hunt before you've done your homework. This could get you in over your head financially. Or, you could be just wasting time looking at homes that are either below or above your price range, or that don't suit your needs.
Before embarking on the search, review your financial situation. How much do you earn? How much do you spend? Can you cut costs to save more? How much cash do you have for a down payment and closing costs? Do you have any major expenses ahead that will deplete your savings? Are your parents eager to help you buy a home? Are you in a high tax bracket?
Once you have a handle on your finances, call a loan agent or mortgage broker and find out how much house you can afford. Be sure to talk to a local mortgage person so that you can get information about where you might find homes in your price range. As soon as you're sure that you're a serious buyer, get preapproved for a mortgage. This will put you in a better negotiation position with the seller when you find a home you want to buy.
Another mistake to avoid is buying a home that doesn't suit your long-term needs. This can happen if you don't analyze your housing needs before you rush to buy. In a fast-paced market, the temptation is to hurry the process along for fear of losing out. Resist this temptation. Figure out what you want and need in a home, and then start looking. If you end up in a home that's too small, or that's in the wrong location, you'll feel compelled to sell and buy another home. Buying and selling homes is expensive.
Working with the wrong real estate agent can also be a big mistake, particularly if the agent is from out of the area. You could miss out on an opportunity to buy a good listing unless you're working with an agent who's on top of the local market.
THE CLOSING:
This risk factor rises when you rely on the advice of an agent who doesn't know the idiosyncrasies of the local market place.
|
