Top Seven Mistakes that Home Buyers Make

Over the past few weeks, we have examined steps that buyers should take to make buying a home a smooth and easy process. This week, we'll cover what I believe are the top seven mistakes that buyers make, so you can avoid them:

1. Looking at homes for sale before getting pre-qualified for a loan.

Unless you have the cash to buy without a loan, it makes sense to talk with a lender about what types of loans you might qualify for and how much down payment you will need. Many buyers fall in love with homes they cannot possibly afford.

2. Getting talked into the wrong kind of loan.

We are very likely entering a period of rising interest rates. So it doesn't make sense to apply for an adjustable rate loan unless you want to pay more interest later.

Instead, focus on fixed rate loans. If you are certain you will need to sell in less than seven years, you might consider a loan that is fixed for only five years, but avoid interest-only loans.

When the time comes, don't shop for a loan based on the rate alone. Compare each lender's good-faith estimate of overall costs.

3. Looking at a house in the wrong location.

Because location is so important in the future value of a house, be very sure where you want to live. If that means renting for six months or a year to be sure, so be it.

Remember that metro Atlanta has some of the worst traffic in the nation. There is a reason that people are willing to pay more for a house in a convenient location. Know where you want to live and find a way to own there.

4. Buying the first house you see.

This often happens when a friend calls and says, "There is this perfect house in my neighborhood, but you have to act quickly."

Your response should be that there is no such thing as the last deal in real estate. Take your time and see a variety of houses in your price range. Compare features and amenities.

5. Waiting for the best deal in the world.

Many buyers, especially first-timers, hope to score a home run during their first at-bat. They want to get a house in great shape for about half of what it's worth. Unfortunately, most true bargains are snapped up before they hit the market.

Focus on trying to find a fair price, and let time and inflation work for you.

6. Not having a professional home inspection.

It is very important to bring in a disinterested third party to examine the home. Only an experienced inspector can give an unbiased view and help you know what you are getting.

That advice is good for resales as well as new construction. Because builders often rely on subcontractors, they welcome a professional inspector who conducts a "phased" inspection.

That means the inspector visits the site several times during the building phase, then returns for a final walk-through. Many county inspectors are overloaded and may just do a "drive-by" of your home. You deserve better.

7. Lacking professional representation.

In my opinion, it is a mistake to undertake the home-buying process without the services of an experienced real estate professional and the legal advice of an attorney.

In almost every case, your real estate agent will be compensated by sharing in the commission paid by the seller. And the quality of your buying experience jumps dramatically as soon as a real estate professional enters the picture.

There are simply too many opportunities to make a wrong turn, and your agent has "been there and done that" when it comes to the twists and turns of the process many times before and has a better idea of how to make the right turn.

Likewise, you are about to enter into the most important and expensive contractual agreement of your lifetime, signing a five-page document in small print that you simply do not understand.

How could you think of doing this without consulting your legal adviser? Instead, have your attorney review everything you intend to sign, and I mean everything.

And do it before you sign it.

Source: The Journal-Constitution