Homeownershp instills a great sense of pride and accomplishment. It also leads to a greater sense of security, stability and community. If you have decided to transition from being a renter to a homeowner - congratulations!
There are many advantages to owning a home, including but no limited to increased net worth, tax deductions and equity loans. Approximately 72% of Maryland residents are homeowners.
It's A Buyer's Market
The equalization of supply and demand is great news for first time home buyers. Home prices have stabilized and sellers have become "motivated sellers," in some case offering buyers cash towards closing costs.
10 Biggest Mistakes Home Buyers Make
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Average Maryland home prices by county* National Ownership Rate by Age** Free Prequalification/Individual Counseling Meeting |
10 Biggest Mistakes Home Buyers Make
1. Not knowing anything about the home buying process
Information is everywhere. There is no reason to enter the market without a general knowledge of the home buying process. You should understand the step-by-step process of buying a home. What documents will you be required to furnish? What documents will you get from others and why? How do you qualify for a mortgage loan? What do you do after you find your dream house?
2. Going it alone without professional assistance
Buying a home will probably be the biggest purchase of your life and you'll need all the help you can get. You need a buyer's agent to represent your interest. A buyer's agent has a fiduciary duty to find you a home within your constraints. The listing agent (the agent whose name is listed on a home for sale), represents the seller - not you. When you work with a buyer's agent, you are employing them for a period of time to service your needs.
A buyer's agent will help you qualify for a low interest rate loan, negotiate the price of a house by preparing a comparative market analysis (CMA) to make sure that you don't overpay, advise you on home inspection and get you to settlement.
In Montgomery county, PG County and Howard County, contact deliagalley@hotmail.com for more information about buyer agents.
Note: In most cases a buyer does not pay commission to a buyer's agent, the commission is paid by the home seller. Ask your agent.
3. Not knowing Your Credit Rating
Your credit rating is an assessment of your financial health. If you don't know your credit rating and score, start by getting a free copy of your credit report from each of the three National Consumer Credit Bureaus: Experian, Equifax and TransUnion at www.annualcreditreport.com.
The federal government entitles you to 3 copies of your credit report a year (one from each credit bureau). In general a credit score of 720 or above is considered good credit. Your credit rating will directly affect your ability to qualify for a mortgage loan and the interest rate of the loan.
4. Not Knowing how much home you can afford
Knowing how much home you can afford sets the bar for what neighborhoods you can afford, the type of home (SFH, Condo, Townhouse) and other home features. You can use our mortgage calculators to determine your monthly mortgage payments based on home price, interest rate and a repayment period. Keep in mind that you will also have to pay property taxes and home owner's insurance. In some neighborhoods a Home Owners Association (HOA) fee may also apply.
5. Not Setting a budget
How much can you afford to spend on monthly expenses, including your mortgage? Plan for future expenses such the need for a new car, child care, education, etc. Ideally, you should not spend more than 36% of your pre-tax income on your monthly bills including your mortgage loan.
6. Failing to priortize your list of "must-haves" and "nice-to-haves"
Do you need 4 bedrooms or will 3 bedrooms do? How many bathrooms do you really need? Do you need a deck or patio or would it be nice to have one? Creating a list of "must-haves" versus "nice-to-haves" allows you to stay within your budget. Instant gratification is not always the answer. Additions and luxuries such as patios, decks, pools, granite counter tops or marble bathrooms can be incorporated into the home as time goes on.
7. Looking Before Leaping
Buying a house is more than visiting open houses. If you are ready to actively search for a home, the first thing you should do is pre-qualify for a mortgage loan. An experienced loan officer can find you the best loan program available for your situation. Most buyer agents work with seasoned loan officers and can therefore refer you to one.
8. Sabotaging yourself
Do not make any major purchases after you have been approved for a home loan. Pre-approval is based on the information provided on a loan application. If you decide to buy a new car, furniture, washer/dryer, electronics - you may jeopardize your pre-approved loan status. Wait till after settlement.
9. Not getting a home inspection
Just because a house looks beautiful on the outside doesn't mean it's wholesome. A home inspection may reveal issues that are not obvious to you. It's well worth the money. A good buyer's agent will always advise you to get a home inspection.
10. Sitting on the sidelines waiting
If you can afford to buy a house, buy one. The biggest impediment to buying a home is the required cash for a downpayment and/or closing costs - but it need not be. There are many government programs available to assist home buyers. If you are planning to move within the next 2 to 6 months and need to prequalify for a loan program, contact us for more information about government assistance programs and qualification requirements.
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As a first time home buyer, it is essential that you understand the home buying process. If you are planning to buy a home within the next 2 to 6 months, learn as much as you can about the purchasing process, now. Our free first time home buyer seminar is open to all Maryland residents. Space is limited so remember to RSVP to reserve a seat. If you are not able to attend a seminar, contact us at 301-223-2323 or info@mdhomebuyers101.com for a free prequalification and housing counseling meeting.
Topics covered include the following and much more...
* How much home can you afford
* How your credit scores affects you ability to own a home
* Qualifying for a loan
* Loan Assistance Programs - VA Loans, FHA Loans, etc
* Shopping for a home
* Home Inspection
* Closing
* Free resources available to you
* - Home prices data provided by National Realtors Association (NAR)
** - 2005 Census Bureau Information
MDHomeBuyers101.com provides free individual first time home buyer counseling and group seminars throughout Maryland with a special focus in Montgomery County, Prince George's county and Howard County. Cities include:Gaithersburg, Germantown, Olney, Silver Spring, Rockville, Potomac, Montgomery Village, Laytonsville, Sandy Spring, Takoma Park, Laurel, Columbia, etc.
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Weichert Realtors. Office: 301-681-0555