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For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help.
We can't help you when you're home shopping (well, maybe we can answer some questions about closing and settlement costs) but here's a list of some no-nos put together by Realty Times.
6 Don’ts When Buying Your First Home
(Realty Times, written by Jaymi Naciri)
These are exciting times. You've finally outgrown apartment
life or living with your parents or sharing a place with waaaaayyyyy too many
roommates, and you're ready to take the leap to homeownership. Now it's time to
prepare. As you embark on this journey, beware of six important don'ts that
could potentially derail your purchase.
Don't think it's too early to get prequalified
So, you're just going to go out "looking" at
houses, you say? The time when you just expect to drive around a little and
maybe visit an open house or two is obviously the time when you're going to
fall in love with a house and want to make a move on it right away.
If you're
not already prequalified with a lender, you may not have a chance at it.
Competition is fierce across the country thanks to low inventory, and
well-maintained, move-in ready homes do not sit if they're priced right. Talk
to a lender now to make sure you can qualify - and learn your max budget - even
if you just think you're casually looking (because that can change in a
hurry!).
Don't wait to the last minute to check credit
As a continuation of the casually looking conversation…you
want to check your credit the second you start thinking about buying a home.
You never know what's going to be on there. Even if you've never missed a
payment and have always done a good job of managing your outstanding debt,
there could be errors on your report that you're unaware of or even something
from many years ago that you didn't realize had been reported to a credit
agency. Those little boo-boos, accurate or not, could be hurting your score,
and a low score could keep you from getting a mortgage at all. Give yourself
time to correct errors or fix blemishes; every tick upward can help you get a
better rate and make your home more affordable.
Don't forget about PMI when calculating your monthly
expenses
The idea of putting as little down as possible on your new
home is attractive, especially if you're not a natural saver. Today, that can
mean just three percent of your purchase price, depending on the loan. For FHA
loans, it's three and one-half percent. The problem with making the minimum
down payment is that you then have to pay Private Mortgage Insurance (PMI).
"PMI is a fee you pay on your mortgage until you owe 80
percent or less of what your home is worth. It's one reason why so many experts
advise homebuyers make a 20 percent down payment; if you do, you avoid the
evils of paying PMI," said Student Loan Hero. "PMI can cost between
0.3 percent and 1.15 percent of your loan annually. Depending on how much you
borrow, that can mean thousands of dollars in extra costs until you can cancel
your PMI."
Don't ignore the closing costs
Many of us micro-focus on the down payment when getting
ready to buy our first home, but there is another important expense related to
the purchase: The closing costs. Closing costs encompass a wide variety of
fees, some or all of which may apply to you depending on where and what you're
buying. They can include everything from the application fee and appraisal to
the escrow fee to the home and pest inspection to the recording fees. You're
looking at between two and five percent of your purchase price for closing
fees, which can definitely add up. Many first-time buyers fail to factor this
in when getting ready to purchase, and you don't want something that could amount
to a few thousand dollars or more to come as an 11th-hour surprise.
Don't forget to factor in all the monthly expenses
New-home communities often quote a monthly payment that
looks quite affordable and that can entice buyers who don't look more closely.
That's because the payment is based on principal and interest only (Typically,
you'll see a star next to the payment that tells you there's a disclaimer at
the bottom of the page.). If you take a look at the small print, you'll see
that there are also taxes and insurance to factor in. In some cases, there is
also a homeowner's association fee. That monthly payment may not be looking so
good anymore.
If you're buying your first home and coming from an
apartment or other rental property, you may not have worked things like a
gardener into your monthly budget. You'll also want to consider that if you're
going up in square footage, there could an increase in your utilities, and you
may be taking on payments for things like water and trash that were covered by
your rental. It's best to have a true idea of what your monthly expenses are
going to look like when buying your first home so you don't end up in over your
head.
Don't think you can go it alone
Can you buy a home without an agent? Sure. Is it a good
idea? Not usually. It could be that you are looking to buy a home that is for
sale by owner. "In the industry, we call these types of sellers
unrepresented," said The Balance. "Beware if you are trying to buy a
home directly from an unrepresented seller. Odds are the seller won't know what
she is doing or she might be taking advantage of you; either way, it could be
problematic."
Unless you are a real estate attorney or are otherwise
connected to the industry and aware of the laws, contract issues, etc., it's
best for you to have representation, regardless of what type of home you are
buying.
For your next title order or
if you have questions about what you see here, contact
Stephen M. Flatow, Esq.
Vested Land Services LLC
165 Passaic Avenue, Suite 101
Fairfield, NJ 07004
Tel 973-808-6130 - Fax 973-227-0645
E-mail sflatow@vested.com
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