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Real Estate Power Hour - Top 10 Home Buying Mistakes

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  • Real Estate Power Hour - Top 10 Home Buying Mistakes

    So, you're ready to buy a new home. Whether this is your first home or your third, it is always a great decision. And one that can hide several pitfalls if you are not careful.

    See below the top 10 mistakes home buyers do when shopping for a new home:

    1. Buying a home out of your price range

    I can't stress this enough. It is very important that you buy a home that you feel comfortable with. Sometimes, home buyers get carried away and end up buying more home than they can afford.

    It is true that mortgage brokers will give you the maximum price you can pay for a home. They calculate that number based on your income and total indebtedness.

    You should treat that number as a starting point and decide whether you want to buy a house for that much or you would rather buy a less expensive house with a smaller mortgage.

    Experts suggest that your total monthly debts including mortgage, should not exceed 36% of your income before taxes.

    2. Choosing the wrong mortgage product

    These days there are mortgage products to fit different goals and budgets. Home buyers should discuss all their options with their mortgage broker and pick the mortgage product that best fit their needs.

    3. Not shopping for the best rates and costs

    Lenders have different mortgage rates and fee structures. Most home buyers talk with only one lender and if they are approved for a mortgage, they end up using that lender. Home buyers should talk with three or four different lenders and mortgage brokers. They should compare rates, terms, and fee structures and pick the one with the better loan. A small difference in the mortgage rate may result in tens of thousands of dollars difference for the duration of the loan.

    4. Picking the wrong community

    Real estate is location, location, location. If you buy a house in a bad location, you will be unhappy. And it will probably be more difficult to sell when you decide to move.

    Before committing to a community, make sure you visit it during different times of the day. Also talk with the neighbors, visit the local parks, read the local papers, visit the local schools. Check the commute times at different hours and days.

    Remember that location is one of the few things you can't change about a home.

    5. Paying too much for your home

    Before buying a home you must make sure you are paying a fair price. The best way to assess this is by working with a REALTOR that knows the area and can give you good advice. You should also check a list of all the recent sales of comparable homes in the same neighborhood. This will give you an idea of what other buyers paid for similar homes in the area.

    6. Falling in love with the property before buying it

    This is another big mistake that many home buyers make when looking for their new home. When you fall in love with a property you will be more inclined to make bad decisions. It is very important that you analyze each property objectively. It is great that you found a home that you like. However, make sure you control your emotions. Be assured that there are other homes that are as good or better than the one you are making an offer on. The same way you found this one, you can find another one if this doesn't work out.

    7. Hiring a bad real estate agent

    Buying a home can be a very stressful process. Make sure you work with a REALTOR who you like and feel comfortable with. Don't make the home buying process more difficult than it needs to be.

    Also make sure the REALTOR you choose understands the local real estate market where you want to buy your property. A local agent will be better equipped to provide sound advice throughout the process.

    8. Forgetting that you may want to resell the house in the future

    When buying a home you should always consider that one day you may decide to resell it. You need to make sure the house you are buying will appeal to a great number of potential buyers when it is time to sell it. For example, you may not mind the noise from a major street nearby. But most buyers will not buy a house close to a major street. Or you may not mind the small bedrooms because you don't have kids. However, most buyers will want bigger bedrooms.

    Your REALTOR should be able to provide you advice on the property's appeal to potential buyers in the future.

    9. Buying the most expensive house in the neighborhood

    It feels great when you have one of the most expensive houses in the neighborhood. However, all the lower priced homes in the area will impact your house's value. And when it is time to sell it, you may find yourself pressured to price your home lower so it is aligned with the local market.

    10. Waiving the home inspection

    You should never waive the home inspection. It is your best opportunity to find problems with the property before you buy it. Home inspections typically run around $300 and usually include a check of a home's heating and air condition systems, plumbing and electrical systems, roof, walls, foundation/structure, drainage, garage and basement.

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