Do You Know How To Avoid The Four Most Common Mistakes Made When Buying A Home?

Do You Know How To Avoid The Four Most Common Mistakes Made When Buying A Home?

Buying a home is one of the biggest purchases of your life and you want to be cautious that you don’t make any mistakes that you’ll regret later on. Here are the top four most common mistakes made when buying a home, along with tips on how to prevent yourself from doing them or how to recover if you have already made them.



Mistake #1: Not Getting Pre-Approved

The biggest mistake made by homebuyers and is the first thing you should do if you plan on buying a new home!

How to Prevent: Easy, get pre-approved! By getting pre-approved, you’ll be able to search for homes that affordable for you, while also putting you in a strong negotiation position when you make an offer.



Mistake #2: Not Using a Qualified Agent

If you’re not sure why you should use a buyer’s agent, (See below)
How to Recover: It’s never too late to get an agent, even if you’re already at contract, they can help with all the legal and negotiation aspects.


Mistake #3: Not Getting a Thorough Inspection

Getting a thorough inspection is the only way you’ll know you have real knowledge about the house.

How to Prevent: Hire a licensed home inspector. They take the emotion out of inspecting a home and give you a real, critique about the home you’re thinking to purchase.

How to Recover: If you didn’t hire a home inspector, try to get a good home warranty in case any issues do arise in the future.


Mistake #4: Focusing on Wants, Not Needs

This mistake is usually made by first-time homebuyers, but can happen to even the most experienced homeowner.

How to Prevent: Make a list of must-haves and refer to it when you’re house hunting. Make sure it is a list of NEEDS not WANTS.

How to Recover: If you’re in negotiations and realize you made this mistake, try using provisions of contract to either get out of the deal or fix the issues before you close.




10 Reasons You Need a Buyers Agent


Due to the age of the internet, you may think you’re able to find your dream home without the help of a realtor. However, here are ten reasons why you still need a buyer’s agent:


1. Convenient: Researching and scheduling showings can consume a lot of your time. Why not let someone who does it for their job do it?

2. Market Knowledge: Realtors understand the market, making it easier for them to find the best home at the right price for you.

3. Insider Knowledge: Not only do they know the market, they also have access to know what homes aren’t on the market, but looking for buyers.

4. Identify Your Needs: You probably have a ton of things you’re looking for in a home. Realtors are able to rein you in and prioritize your needs so it’s not impossible to find your dream home!

5. Access to Comps and Sales Information: Knowing what other houses similar to yours sold for will come in useful when you start submitting offers.

6. Professional Negotiation: Speaking of making offers, it can be a very scary and daunting experience! Realtors have done this many times and will help make it easier on you.

7. Mitigater of Emotions: Buying a house is very emotional. A realtor will remove any emotions associated with the sale and get you your home at a great price!

8. Professional Connections: to get to the closing table, you have to go through a lot of professionals. A realtor already knows and has worked with these professionals, so you won’t have to take extra time to find your own.

9. Knowledge of Industry Standards, Legalities and Writing a Contract: Do you know the rules to all of these? Enough said.

10. And if the top nine reasons didn’t convince you yet, then this one definitely will: A buyer’s agent is free! The agent is paid by the seller through commission. So you really have no reason NOT to use a buyer agent.



Did we miss any reasons you use a buyer’s agent? Let us know!

·         What makes a Mortgage a Jumbo Mortgage, and When Should You Consider One?

By: Nicole Gates

Home loans fall into two broad categories based on size of loan: conforming loans and jumbo loans. Conforming loans top out at $417,000 (with a few exceptions due to high cost geographies).  This amount is set by the Federal Housing Finance Agency (FHFA), and conforming loans are eligible to be purchased by Fannie Mae and Freddie Mac, two government sponsored enterprises that help to make more funds available for mortgage lending to home owners.

Home loans that are over $417,000 (again, with some exceptions) are called Jumbo Mortgages, or non-conforming loans.

A Jumbo Mortgage may be a great choice for you if…
• Home prices in your area are high. You might not be left with many other options due to the high-value real estate in your area.
• You have a salary that can afford larger monthly interest payments, but don’t have enough for a down payment that would put your loan amount within the conforming loan range. As long as you feel comfortable with the larger monthly payments, a jumbo mortgage could be a great fit for you.

You don't have to worry about not having enough options if you decide on a jumbo mortgage. Jumbo mortgages are available in many different choices, including:

Fixed Rate

Adjustable Rate

Interest Only

FHA (in certain states)

Additionally, when you take out a jumbo mortgage and make on-time payments, you may be able to build your credit history and improve your credit score.

When considering a jumbo mortgage, you should be aware of these aspects as well:
• Jumbo mortgages typically have a higher interest rate than conforming loans with similar terms, due to the loan being a higher risk for lenders (as these loans can’t be purchased by Fannie Mae and Freddie Mac).
• In addition, it may be more expensive to refinance a jumbo mortgage, mainly due to higher closing costs.

Notes on Fed Meeting 12.12.2012

• FED SAYS MONTHLY PURCHASES TO TOTAL $85 BLN
• LINKS INTEREST-RATE OUTLOOK TO INFLATION, UNEMPLOYMENT 
• ADOPTS ECONOMIC THRESHOLDS FOR POLICY TIGHTENING
• *FED TO KEEP BUYING MORTGAGE BONDS AT PACE OF $40 BLN PER MONTH    
• *FED BOOSTS QE WITH $45 BILLION IN MONTHLY TREASURY PURCHASES 
•  adds 5s to QE
• * DROPS 2015 DATE FROM STATEMENT....the linkage to economic variables substitutes for the calendar target so not quite a big deal.    
• *RATES TO STAY LOW WITH INFLATION SEEN AT 2.5% OR LESS, or 50 bp over target *>> and as longer-term inflation expectations remain well anchored.   
• * RATES TO STAY EXCEPTIONALLY LOW WITH JOBLESS ABOVE 6.5%         
• EXPECTS TO START TREASURY PURCHASES IN JANUARY    
• * FED LEAVES FEDERAL FUNDS RATE TARGET AT ZERO TO 0.25%    
• * FED SEES `SIGNIFICANT DOWNSIDE RISKS'    
• * LACKER DISSENTS FROM FOMC DECISION
• ** growth in business fixed-investment has slowed

 

Qualifying For A Mortgage

By: Nicole Gates

One of the most anxiety-driven parts of buying a new home is seeing if you qualify for your mortgage. To some, it may seem like a gamble, with no way of predicting if you'll qualify or not. However, it's a very specific equation to not only help the lender decide if you're a reliable risk, but also to make sure that you won't be overextending yourself in order to afford your new home.

But what is this equation? How do you know if you make enough to afford the new home of your dreams?

Previously, it was a good tip that a borrower could afford three times their gross annual income on a home loan. That would mean, if you made $40,000 per year, you could afford a $120,000 mortgage.
However, it's wiser to take a much deeper look into what mortgage amount would fit your lifestyle. Take the time to look into your individual budget and figure out how much money you have to spare. Decide what a monthly payment on a new home will be, while figuring in taxes, maintenance, insurance and any other expenses that come along with owning a new home.
Generally, lenders want borrowers to have monthly payments around 28-44% of a borrower's monthly income, but with a total monthly debt that doesn't exceed 35% of that income.
To do this, lenders determine your mortgage amount in two ways:

1. Total Monthly Housing Costs Compared To Total Monthly Income
Through this process, a lender will take your total gross amount you receive per month and multiply it by .28 to determine what the total housing costs are going to be for you.
For example, say you make the $40,000 annually we mentioned above and you only want your max payment to be 28% of that. Your lender would take 40,000 and multiply it by 0.28 to get 11,200. Then they would divide this number by 12 months and your max monthly payment should be $933.33.

2. Debt To Income
To figure out your debt, the lender then takes all of your monthly payments, extending beyond 11 months into the future (this includes installment loans, car loans, credit card payments and more) then multiplies that number by .35. The total calculated should not be exceeded by the total monthly debt for you to qualify for a new home loan.

For this, your lender would take your annual earnings of $40,000 and multiple it by 0.35 to get 14,000. Divide 14,000 by 12 months and your monthly debt, including your new mortgage payments, shouldn't exceed $1,200.

For more help figuring out exactly what you can afford in order to qualify for a new mortgage, check out our Mortgage calculator. Or download our eBook "Demystifying the Mortgage Process", a jargon-free guide for a smooth mortgage process.