It’s the American dream that has of late seen a dark cloud emerging overhead. The cloud is named “dropping home values.” It’s happening everywhere except here in the Oklahoma City metro area. My article a few weeks ago demonstrated how property values are holding firm here in the metro while in many places throughout the United States home values are eroding like a sugar cube in hot coffee.

So for the few areas across the country — like our great city — where purchasing real estate still is a great idea, what are some of the more important pitfalls to avoid when taking the plunge into home ownership?



Inspect the Inspectors

Every home transaction should have an inspection performed by a licensed and professional inspector. Almost every Realtor has an inspector he likes to use and he usually isn’t bashful about recommending him. It’s still your responsibility to meet the suggested inspector to determine whether or not you are comfortable with him. If not, interview several others until you find the inspector you want. Sometimes it’s best to find the inspector of your choosing, this way you might feel more comfortable that the only interests being served are yours.



How much you can afford

This surprises many first-time buyers, but the people offering you the advice really don’t know what you can afford. When providing you a monthly payment amount, they are giving you the guidelines from the lenders. Only you know how much home you can afford so you still can save for the future and go on vacations. Remember, the amount of home you can afford is determined by you and your budget, not an arbitrary figure extracted from a lender’s equation.



Short Term Financing

Taking a five-year ARM (Adjustable Rate Mortgage) loan may be appealing because the rate is a bit lower and anyway, you’ll probably refinance the loan within five years. But be careful, your job or income situation may change between now and then and you might not be able to refinance later. Or your current health situation may not be a rosy five years from now. And don’t forget the potentiality that interest rates could rise making it impossible for you to afford the payments at the newly refinanced rate.



Opening and/or closing credit accounts

Once financing for your new home is under way, in other words when you’ve signed the papers and the loan process has begun, don’t go out and apply for new additional credit of any type thinking you’re helping your credit picture. At the same time, don’t close any credit accounts during this time. Both of these activities have negative impact on your credit picture. The best advice is to wait until your financing is complete, in other words, until after closing, then you can go out and apply for new credit or close existing credit accounts.



Study the neighborhood

Drive around the neighborhood making your own observations. Don’t take the flyer’s opinion that it’s a “quiet neighborhood.” Take several tours at different times of the day and evening. Perhaps even walk around the neighborhood and make additional observations. Talk to neighbors and find out where the problem neighbor lives. Every neighborhood has one and you don’t want this person living next door to you.



Buying a home when you’re not ready

Don’t allow anyone to rush you into buying a home until you know you’re ready. It’s easy to get into the home buying mode when key friends or relatives are purchasing new homes. Especially when your current home has lost its state of nirvana. Be your own boss, don’t let anyone rush your plans to buy; you’ll know when you’re ready.



Not buying a home when you are ready

Lastly, don’t sit on the sidelines forever. No one truly knows what the real estate market is going to do. So when you’ve done your research and you know you’re ready, dive in. Tour the home and then a couple of days later schedule a follow-up tour. If the home still meets your needs and it falls inside of your budget, make your move! Trust your instincts; make your best deal and enjoy it.



TREY BOWDEN is a licensed mortgage professional in Edmond.