Today I’m going to be talking about five homebuyer mistakes that first-time buyers commonly make that can cost them thousands of dollars, or even to lose out on the home that they love! Don’t make these mistakes. Hi there, my name is Emily Farmington and I’m a Realtor® with Keller Williams, Realtors® in Nashville. Tennessee. Thanks for reading this article. If you are a first-time homebuyer I have the perfect guide for you and it’s totally free!
Alright, let’s talk about some big mistakes you don’t want to make when you’re buying your first home. Number one, not getting pre-approved. Listen to me carefully on this one. I know there are some flashy websites and online calculators that will claim to give you an idea of what your budget may be, but none of that matters a lick. The only thing that truly matters when you’re in the market to buy a house is getting pre-approved from a lender. That lender is going to take a look at all of your qualifying factors and give you a very good feel for what they are willing to lend you. Now you don’t have to spend up to the top, certainly not, but that is going to be the framework in which you are shopping. If you are not pre-approved and you are out looking at your houses, you are wasting your time, you’re wasting your agent’s, time, and you’re wasting the seller’s time. If you are not pre-approved no seller is going to take your offer seriously. And, furthermore, you are simply not going to be able to compete with other serious buyers in the market.
Number two, messing up your DTI, your debt-to-income ratio. So say you have been smart, and you’ve gotten pre-approved, you’ve been working with a lender. That lender has pulled all sorts of data points about you in order to qualify you for a mortgage up to a certain amount. Things like your debt, your income, your credit score. If you get into a contract on a property and then you go out and you start making financial decisions like buying a new car, financing a boat, going to a furniture store and buying a whole new suite of furniture for your fabulous new home, applying for in-store credit cards *gasp*. Don’t do any of that! Those are the sorts of things that can mess everything up, throw it off the rails, and mean that you will not be buying the house that you are in love with because all of those things could mess up your debt-to-income ratio, especially if you’re squeaking by the hair on your chinny-chin-chin. Always, always talk to your lender before making any major purchases, and best practice is to just hold off until you are holding those keys in your hot little hand.
Number three, internet lenders. It has been my experience that local lenders will beat Internet lenders any day, any time. Now I know that internet lenders can have some attractive looking websites, and they may be advertising an interest rate that looks especially appealing. And, it can also be appealing to not actually have to talk to a real human being about potentially sensitive financial information. Maybe you’re just feeling a little shy, a little squeamish about it. I get that, but talking to that real human being in the form of a friendly local lender is going to save you money over time. They have very competitive interest rates, low fees, low closing costs, they have a vested interest in making sure that your transaction crosses the finish line, and they can help you with all sorts of other things like credit repair, and personal advice that applies to your local area.
Big mistake number four, not committing to a Realtor®. I know. I know! Sometimes Realtors® can seem a little salesperson-ish. I get it. I’m not a big fan of salespeople myself. That’s why I don’t consider myself to be a salesperson, rather a consultant, But I digress! all realtors are not the same. Maybe you think it would just be easier to look online and give the agent a call if you happen to be interested in that house? But wait! When you do that it is important for you to realize that that agent is representing the seller, and if you were to decide to move forward and write an offer on that house, that agent, who is representing the seller, is now going to be in the state of dual agency where they are representing both sides. When you commit to a Realtor®, and you have chosen one carefully, you can bet that that Realtor® is going to work like a bloodhound to get you what you want. Did you know that a significant number of homes are sold before they ever even hit the open market? The reason for that is that listing agents may have a pocket listing, or a private listing. The only agents who will know about that private listing are agents in the know. Like your agent, who you committed to. Another reason for that is that when an agent takes a new listing contract, they’ve signed the paperwork with someone who wants to sell their house, there’s rules regulating the amount of time between when they take that listing and when it used to go on the MLS. What do you think is happening in those 3 days between getting that listing contract signed and it going on the MLS?! Well, I can tell you. A whole heck of a lot of talking and showings between agents. If you want in on that behind the curtains scene you need to be committed to a Realtor® who is well connected.
Mistake number five, looking for a unicorn. I know, I know, we all have a vision in our mind of what our insta-perfect house is going to look like, but news flash, chances are that house doesn’t even exist or its twice your budget. Oh, the tragedy! I know! We all have our list of needs and wants but you have to be realistic about what your budget will buy you. Instead, try to focus on the things that cannot be changed like the location or the overall structure of the house. So many things can be changed and they can be changed relatively inexpensively. Paint, floor coverings, light fixtures, all of those are projects that most people can handle. I always tell my buyers about the 80% rule and it goes like this: when you have found a house that means 80% of what you want, 10% of what you can change, and 10% of what you can live with, you’ve found a really good house! Now I’m not trying to tell you to rush into things. Taking your time is good, especially when you are in the beginning stages of your first home purchase. But, if you’ve been looking for a while and you haven’t found anything that’s a strong possibility, chances are you need to readjust either your expectations or your budget.
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