You fall in love with a dress or a pair of shoes online and click the “Add to Cart” button, and in a few seconds you’ve made a purchase. A few days later you excitedly open the package delivered by Fed-Ex only to find the dress is too tight or the shoes pinched your toes. Now you have to pay to send it back, and you still don’t have a new dress or shoes. Sometimes we get lucky with a perfect fit, but usually taking the online shortcut results in disappointment.
Taking shortcuts when buying a home can also result in disappointment and money loss.
SHORTCUT #1 – Not Getting Pre-Qualified from a Lender
It’s definitely more fun to look at houses than to fill out paperwork and gather pay stubs and tax returns. But that is backwards. Just like the ill-fitting dress, you may fall in love with a home that is a bad fit for you. So your first step to home ownership is an appointment with a lender. We recommend Johnny Alo of Academy Mortgage, but any mortgage lender will work…..But a word of caution here….On-line lenders are enticing, just like online shopping, but in our experience a local lender you can readily speak with is your best chance for a smooth borrowing process.
SHORTCUT #2 – Not Working with a Qualified Professional Real Estate Agent
Your Uncle Max is an insurance agent, but he has a real estate license and he can help you…..right? And your Mother said Uncle Max will credit some of his commission to you. Think this one through carefully…if Uncle Max is not actively working as an agent, he will not be current on the market values, his negotiation skills are rusty and he is unfamiliar with the purchase contract and all its addenda. Further, he may not be available the moment you need him. This will cost you money, not save you money.
Find an agent you trust to look out for your best interests. Read the profiles of the ten Team Red Brick Realtors on this site to find one that best suits you. You can put your trust in all of them.
SHORTCUT #3 – Using All of Your Savings for Down Payment
Keep your “rainy day” fund intact. Your new home will be a delight to you until you have to decide between making your mortgage payment and getting your car repaired. There are many mortgage programs with affordable low down payments. One of our Team Red Brick agents and a good lender can find the right mortgage for you.
SHORTCUT #4 – Buying Too Much House
I know, I know, you’re qualified for $275,000. But, if you like to camp or travel, participate in sports or theater, and if you enjoy eating out occasionally, you will begin to hate your new house if your big mortgage payment prevents you from enjoying life. So start by looking at homes in the $240,000 – $250,000 range. Today’s historically low interest rates give you the ability to buy the size home right for you and allow a budget to change the flooring or enroll junior in a private school. Don’t rush into a purchase. New homes come on the market every day.
SHORTCUT #5 – Let’s Buy a New Sofa!!
No, no, no! Keep that credit card locked up from the moment you enter into a purchase contract until you close escrow. Any changes in your financial situation can prevent final loan approval. Remember you are home shopping on a “PRE-QUALIFICATION”. Final approval from the underwriter happens weeks into your escrow. If you charge large items, it can affect your credit and prevent you from getting your loan.
So follow these tips…and Happy Home Hunting!