Buying a home can be one of the most memorable and exciting times in life. But unless you are extremely wealthy, buying a home is no impulse purchase. It will take plenty of preparation and research. Although it may seem like a daunting task, there is hope. Find yourself a great realtor and you will have a much better experience. As mentioned earlier, you will need to prepare. This means that you will have to avoid some actions, in order to ensure you will even be able to buy a house. We asked some real estate agents to share their views on some of the dumbest reasons people can’t buy a home. Don’t worry, they are avoidable!
Reason No. 1: Waited to line up financing
“The first step in the home-buying process should be to meet with a mortgage lender to go over your financing options”, says Benny Kang, a real estate agent in Irvine, CA. “You really don’t know what you can actually afford until you meet with a lender,” says Kang. Although you feel confident in your purchasing power, there are factors that a lender will need to factor into your loan that you have never heard of.
Reason No. 2: Using an unreliable mortgage lender
The mortgage industry is polluted with frauds—including a slew of fake or unreliable lenders. trusting in a bad lender can cause your escrow to fall through and give you an endless supply of headaches.
“Sometimes sellers reject offers because of the buyer’s lender,” says Philadelphia real estate agent Kathy Conway. To make sure your financing is sure and reliable, ask your real estate agent for lender recommendations instead of, you know, Googling it. And inform yourself on some common lending terms and practices.
Reason No. 3: Thinking pre-qualified is the same as pre-approved
Pre-qualification and pre-approval might sound similar, but they’re not. Think of those credit card offers that say you are pre-qualified. When you call in and actually apply, it turns out you weren’t approved. You were simply qualified to apply. Basically, anyone can be pre-qualified for a loan, because it only involves having a speaking to a lender about the state of your finances (no documents are exchanged). Being pre-approved, meanwhile, involves the lender collecting the necessary documentation such as, your tax returns, bank statements, pay stubs, and more to put your loan together, and submitting the file to an underwriter for review. Once your information is verified, the lender will issue you a commitment in writing up to a certain loan amount that should be good for up to 90 or 120 days.
“When you submit an offer on a home, you’ll need to include a pre-approval letter from your lender”, says Conway.
“Educated sellers won’t even entertain an offer unless the buyer has a letter of pre-approval” from a reliable lender, Conway says.
Reason No. 4: Shopping above your price range
Have you ever heard the phrase, “champagne taste on a beer budget”? It is common when it comes to buying a home to desire the absolute best. Think of your agent as a “buying coach” who will help keep you in your available market. If you aren’t able to buy a million-dollar home, that’s fine, there are ways to take a subpar home and turn it into a gem. All it takes is a little vision.
Reason No. 5: Lowballing in a sellers’ market
Rely on your real estate agent to determine whether a house that you’re interested in has an accurate list price. (Agents can do this by performing a comparative market analysis, which requires looking at recently sold properties that are comparable to the house that’s up for sale.) “If a home is fairly priced, it might make sense to put in an offer at full price”, says Kang. Especially, “if you’re in a sellers’ market, making a crazy lowball offer can piss off the seller and destroy your offer”, says Kang.
Reason No. 6: Submitting a bad personal letter to the seller
When competing against other buyers, you can submit a personal letter with your offer. But be careful not to overshare in your letter.
“Stick to the fact that you love the house and the neighborhood,” says McDonough. “Don’t get into personal details” such as your political or religious preferences. Also, you will definitely want to leave out any remodeling you plan to do to the home.
These are just a few tips on how to get the best homebuying experience as possible. And remember that home is where your heart is, but don’t let your heart in the home until after the close of escrow. Happy hunting!