Many first-time homebuyers hear stories from their parents and grandparents about buying a home in Springfield, MO or other communities for the first time. Today’s real estate market and lending climate is vastly different. While interest rates are considerably lower than the 1980s, it’s a fast and competitive real estate market.
According to an article by wtkr.com, the housing market is not for the faint of heart. In fact, many homes sell for above asking price. A Redfin report showed homes across the country go from listing to closing in a rapid 37 days. Most millennials’ parents and grandparents did not have a difficult time finding an affordable home to buy. On the positive side, millennials still enjoy historically low-interest rates. Instead of asking parents and grandparents for outdated and obsolete home buying advice, talk to a Springfield real estate agent about avoiding common first-time home buying mistakes.
Failing to obtain a pre-approval letter
Instead of waiting until you find a dream home, get the pre-approval letter from a lender as a first step. Real estate professionals point out the market moves quickly, leaving many buyers behind. To compete with all-cash buyers, it pays to have a pre-approval letter a well as a buyer’s agent.
Letting emotions rule decision
Another common mistake first-time homebuyers make is getting too emotional about a particular home. A good real estate agent helps you stay grounded so you don’t max out your mortgage limit due to bidding wars. When touring homes, consider how the staging, painting and inexpensive cosmetic improvements affect your feelings. Instead of getting too attached to a particular home, get attached to a particular design or style. Once you buy a home, decorate it, change out the appliances, paint and add upgrades that match the dream home that was not within your budget but made your heart leap.
Buying items on credit before closing
Don’t take out any car loans or open credit cards before going to closing. Even though you obtain a pre-approval letter, the lender will yank a loan away from you if you dramatically alter your loan-to-income ratio. It’s also not a good time to change jobs. Maintain a fairly consistent financial situation when house hunting.
Other good advice includes making an offer contingent on financing and inspections. While it’s possible waiving a contingency makes you more attractive to a seller, it also leaves you vulnerable. Talk to a real estate agent about the risks involved in more competitive strategies.