Triangle Area Real Estate News & Information

Buying your first home should be exciting; just be careful not to make these common first time home buyer mistakes. As the picture indicates if you're unprepared it's easy for a home buyer to feel overwhelmed.

Mismanaging Their Credit

It's easy to for first time home buyers to become overwhelmed with advice; whether from well meaning friends, family and coworkers to “advice” they come across on social media sites or other sources of frequently well intentioned but often erroneous information. When it comes to your credit score (one of the most important factors in determining the mortgage terms a home buyer will be offered), it's easy to inadvertently make a wrong move that will harm a home buyer. While it might seem like a smart move to pay off all your credit cards or cancel credit cards you don't use, but doing so will typically lower your credit score at a time when it really hurts. When you do go under contract to buy a home, resist any urge you might have to open up new credit lines, or make major purchases such as new furniture, a new car etc. Over the years I've had buyers go out and open up a new credit line with a department store to take advantage of an an offer to receive an extra discount on their purchases only to find out that doing so lowered their credit score just enough to their mortgage loan in jeopardy or modify their interest rate.

Not Understanding The Difference Between “Pre-Approved” & “Pre-Qualified”

Many home buyers regardless of whether their first time home buyers or repeat buyers don't really understand the difference, nor in my experience do most Sellers and many Realtors, yet the distinction is hugely significant. Pre-qualified means you've spoken to a lender for a few minutes and they may have pulled one credit report and/or quickly run you through the Fannie Mae/ Freddie Mac pre-qualification computer program. This is not pre-approved. Pre-approval will require a buyer to submit at least two years of filed tax returns, 2-3 months worth of bank account statements, and give a good deal of information to the lender, who will then pull what is known as a tri-merged credit report (from all three major credit reporting agencies), will make a formal request of the IRS to verify the submitted tax returns as accurate, and will independently verify employment information as well as the other information they have requested from you.

This process can take anywhere from a couple of days to a week, but at the end of this period the Lender can then supply a full pre-approval letter which not only puts a home buyer in the strongest possible negotiating position but will also allow a home buyer to move much more quickly once they've identified the house they wish to purchase.

Assuming That All REALTORS & Lenders Are Made The Same

This can potentially be the biggest mistake a home buyer can make and nothing could be further from the truth. Choosing the wrong lender can result in problems ranging from, unnecessary stress and headaches throughout the mortgage process to paying higher than necessary interest rates, origination fees and/or even closing on time. I prefer my buyers speak with me before selecting a Lender. I don't use just one Lender; and the reason is simple, not every Lender is a good fit for every Buyer.

I personally vet my Lenders and hold them accountable for the service they provide my clients. I have half a dozen different Mortgage Lenders I regularly work with and several others I can choose from if necessary. I do this for one reason only, it's to both my and my Buyers advantage. Realtors are no different, choosing the right Realtor will ensure you don't pay more than necessary for the property you're buying, will simplify the entire process and will likely end up saving you time and money. Consumers rarely know that 80% of all new Realtors won't be in real estate within the first two years of getting their license, that the vast majority of Realtors are barely making it financially (most gross less than $45,000 annually) and so may be inclined to take short cuts as their concern may be more focused on earning their next pay day than in doing what's in the best interest of the client. Experience matters.

Buying The Wrong House

Just because a Lender tells you you can buy a home up to a certain amount doesn't mean you have to. I typically council my first time buyers to try to find a home that will cost between 10%-20% less than the amount their pre-approved for. Doing this is a great way to avoid financial stress now and in the future. Thinking of buying a foreclosure? Don't their rarely the deal you may think they are and in fact you're buying someone else's problem. Should by chance you actually do come across a good foreclosure deal rest assured you'll be competing with much more experienced cash buyers. Thinking a “short sale” might be a good deal, think again. Short sales are anything but short, be prepared to spend months just waiting to hear if the Sellers mortgage Lender will even agree to the deal and remember the list price means next to nothing.

If you're thinking about buying your first home, it's crucial that you work with an industry professional. Get in touch with our team online or call us at 919-659-5173.