Smart Tips for First-Time Buyers
Learn the common missteps first-time buyers make on the way to their home purchase - and how to avoid them
By Tim Bearden
Buying a house is a purchase every individual and family wants to make. But buyers should realize that their first home may not be the home they're going to live in forever. A first home is just that - a first home.
One of the best steps you can make on the road to homeownership is to search for a house to live in - not a project to take on, like the handyman specials on HGTV. Know when to draw the line when purchasing a home that needs renovations, says Linda Kepple of the Kepple Team at Keller Williams Realty, Peoria, Ill. "Of course there are going to be things they can do, but sometimes they take on more than they actually can," Kepple says.
Brenda Bonello, also of the Kepple team, suggests not being afraid to buy a house that's a little more expensive up-front. "Paying $50 more a month in mortgage is much easier on a first-time homebuyer than having to take $10,000 out of their pocket to update major systems," Bonello says.
FORGET FLIPPING IT
Another common mistake is putting more into the home than you can get out of it when it comes time to sell. First-time buyers often think that if they make major improvements to the house they will get those expenses back at resale. But the wheeling and dealing of the boom years have passed. "You only recoup a percentage of any remodeling project or updating project," Bonello says.
INSPECT, INSPECT, INSPECT
You like what you see, so where do you sign? Not so fast. Failing to get a home inspection isn't just foolish, it can be financially crippling.
"Always, always, always get a home inspection," Bonnello says."[First-time buyers] are not used to being homeowners and maintaining a home. They have no idea what the crack in the foundation can mean, or water in the basement."
Adds Brett Kelley, owner of the Chicago Inspection Agency, Prospect Heights, Ill., "It's like you want to buy a really, really nice used car like a Lamborghini. You're going buy yourself a $100,000 used Lamborghini, you might want to spend a couple hundred dollars to have a mechanic look at it to make sure someone didn't put a Volkswagen engine in the Lamborghini."
GET PEOPLE IN YOUR CORNER
Kelley says potential homeowners also should invest in the people that protect them: lawyers.Without an attorney, it's difficult to get the inspection report read by the seller's attorney or to get desired improvements and repairs, based from the report written into the purchase contract. Lawyers also guide buyers through the legalese of the myriad documents they'll sign at closing.
LOOK AT MORE THAN ONE LOAN
Don't go one-and-done when it comes to lenders. Shop around, says Tony Garcia III, a sales manager with Wells Fargo Home Mortgage, Covina, Calif.
"The biggest thing when they're shopping for a lender is to make sure they feel comfortable with the person they're working with," he says. "You need to really feel a connection, that the person ... is really taking the time to educate [you] to understand the process ... to answer any questions they have. If [you] don't feel comfortable, walk away."
Also, be sure to understand what the lenders are telling you, Garcia says, as lenders often use terms that first-time buyers won't understand.
"If you don't understand it ... you may sign something or enter into a contract that you really didn't want," he says.
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