TREY BOWDEN is
EDMOND — It’s official; President Obama has extended the homebuyer tax credit through April 30. This legislation translates into an $8,000 tax credit for first-time homebuyers and $6,500 for subsequent homebuyers. It also means an increase in activity on real estate transactions.
Because of the deadline, everyone should anticipate that the market will be a bit more crowded than it has been of late. The more crowded the market gets, the easier it becomes for homebuyers to commit one of the seven deadly home buying mistakes.
• Demand advocate accountability. Every home purchase involves several key players. These participants include the Realtor, the home inspector, the pest inspection, the appraiser and the lender. Because most of us don’t buy a home every year, it’s easy to get lost in industry-specific speech shuffle. Words and terms that the average consumer doesn’t understand easily can lead the buyers to unnecessary confusion.
Here’s the bottom line: Everyone involved in your home transaction works for you. They are providing a service you need to purchase a home. They are spending your money. That makes you the boss. If something isn’t clear, call a time-out and demand a clear definition. In short, question without fear.
• Don’t be a house hog. This is a simply mistake that many home buyers make: buying more house than they need or buying a home that they are barely able to afford. Life has a funny way of handing surprises to us. If you buy a home you are barely able to afford, you are setting yourself up for trouble the next time life surprises you with an unexpected change.
• Flatten financing fees. When signing the paperwork for a new mortgage, always remember that you actually are purchasing financing. There always will be some fees associated with all financing, and this is not the concern. It is the excessive charges that cause homebuyers to pay too much to get into a home. When it comes to financing, be smart and ask questions about the fees you are being charged. It’s your money; make it work for you.
• Credit roulette. Once you’ve been approved for financing, don’t do anything that could negatively impact your credit report and scores. One homebuyer I know didn’t think that quitting his job three days prior to closing would impact his ability to buy a home. He was in for a surprise when the underwriter called his workplace to verify employment the day before closing. He lost his financing and the house. Another homebuyer decided that their new home required a house full of new furniture. So right after being approved for financing; they opened a large account at a local furniture store and maxed it out. Their credit scores took a dive and when the underwriter pulled their credit just before signing off on their loan, she discovered that their new scores fell below the minimum approvable scores for home financing. They too lost their financing and couldn’t buy the house.
• Know the neighborhood. Simply because you like a house and the neighborhood, remember that the wise homebuyer takes the time to get to know the area just a bit better. Drive through the sub-division at various times of the day. What is traffic like entering and exiting the neighborhood? Are there a lot of cars parked on the street at night? Stop and ask some of your potential new neighbors the things they like and dislike about living in the sub-division. If the neighborhood has a pool, give it a quick look. And don’t forget to read the neighborhood association bylaws. Make sure you can live with these guidelines.
• Ready, set, think. You’re ready to buy a home. You have the down payment and closing costs and you have your financing arranged. Before signing the contract take a step back and think. Does this home do more than meet our present needs? Will it meet our needs for the foreseeable future? What are the projected values of this home for the next 5, 10 and 15 years? If we have to stay here longer than we anticipate, will we be happy here? Buying a home involves emotions, but don’t let the emotions rule the decision.
• Paralysis of analysis. On the other side of the spectrum is the tendency of some homebuyers to delay making a decision because they are still thinking about it. Great home buys have been lost by homebuyers who sit on the fence too long after gathering all the necessary data. Every real estate transaction has a point when it’s yes or no. When it’s time to paint, get out your brush or get off the ladder.
TREY BOWDEN is a licensed mortgage provider in Edmond. To read more go to homeowner
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