Buying a home is complicated. There are many options you may not be aware of, and not knowing about them could cost you thousands. Last month, we discussed 5 costly mistakes for first time home buyers, but there is much more to consider. Part two of this home buyer series will cover 5 more costly mistakes when buying a new home, which could save you thousands of dollars.
Confusing Prequalification with Preapproval
Have you ever received a letter from a credit card company or loan agency telling you that you are prequalified, only to find out that you still have to be approved before you can get a new line of credit? That same concept is replicated with mortgage loans.
Prequalification for a mortgage can give you a general idea of what type of loan you might qualify for so that you can begin to shape your budget. However, it does not mean that you are approved for a loan.
Preapproval is dependent on your current financial situation being evaluated by an underwriter. That mortgage underwriter then preapproves you for a conditional loan based on that evaluation. Being prequalified won’t guarantee a loan, but it can help.
Not Shopping Around for the Best Rates
It’s easy to walk into an office, hear a smooth sales pitch and then agree to move forward with the first lender you meet with, but that would be a mistake. When purchasing a home, you want to make sure that you have the best lender fees and the lowest loan rates. The difference in rates could cost you thousands over the length of your mortgage. Shop around to at least 3 different lenders and choose the one with the best rates. You can start by looking at a mortgage rate table here.
Putting Your Deposit in Jeopardy
Sales contracts for buying a new home can be lengthy. From home inspection to finance contingency clauses, there is a lot to unpack and a lot that can negatively impact you. Many first time home buyers might disregard these as standard clauses that don’t garner much attention, but these clauses hold a lot of power and should be given serious consideration.
For example, there may be a financing contingency clause that states that your offer and deposit are contingent on being able to secure financing. If you fail to secure the loan, you could potentially lose your deposit. Make sure you consult with a real estate attorney before signing any contract.
Forgetting about the Home Buyer Rebate
In Florida, you can negotiate a home buyer rebate that could be 1% of the value of the home. Home buyer rebates are not commonly spoken about, but getting back $3,000 on a $300,000 home can make a big difference in covering any costs related to closing or renovations. Do your research and bring it up with your agent.
Overlooking the Hidden Costs of Home Ownership
Many first-time home buyers overlook the hidden costs of owning a home. Before setting your budget, calculate additional expenses including homeowner’s insurance, HOA fees, property taxes and the various maintenance tasks that pop up over the years. Home buyers spend an estimated $2,000 annually on maintenance alone.
Save Every Possible Cent by Going With a Real Estate Attorney
Whether you are a first-time home buyer or not, there are many ways to save money when purchasing a home. Make sure that you have a trusted real estate attorney to help guide you to the best possible deal. Cipparone & Cipparone are real estate attorneys with decades of experience. If you want to make buying a new home a simple, positive experience, give us a call.
**This blog is for general informational purposes only. Cipparone & Cipparone, P.A. does not distribute legal advice through this blog. As such, this blog does not constitute legal or other professional advice, and no attorney-client relationship is created between the reader and Cipparone & Cipparone, P.A.Tags: home buyer, real estate, real estate tips, residential rea