Foreclosures are still happening and will continue for awhile, no matter what advice you hearing about a possible bottom of the real estate market in the Twin Cities. Home values have taken a beating and are creating scores of opportunities for buyers.
Mortgage rates are sitting at record lows depending which day or hour you are looking at. Oh, and there is also that $8000 tax credit that is sitting out there and just announced the use for a down payment contribution or used for closing costs.
Avoid These Mistakes
No home transaction is perfect but there are some mistakes I see home buyers make when it comes to buying a home. Here are a few:
All foreclosures are a deal
Wrong. Just because the house sold for X amount of dollars a couple of years ago and now is selling for lower. Doesn’t always mean that the house is a good deal. Pleny of properties that are bank owned are starting to get a lot of multiple offers driving up prices when the property might not be worth it. Also noted that most foreclosures might require an extensive amount of work to make livable.
Not Finding a Good Buyer’s Agent
Why not use a buyer’s agent, their services are “free” depending on how you look at it and fiduciary duties only to the buyer. Don’t just run to the listing agent, they have an established relationship with the seller and are probably looking to nab both sides of the sale. They probably don’t have “you” the buyer’s best interest in their hands. Interview a few buyer’s agents and get comfortable with them.
Underestimating Costs of Homeownership
Murphy’s Law states “whatever can go wrong, will go wrong”. Very true when owning a home, they don’t get any more new as they age. Homes require monthly and yearly maintenance not to be overlooked. Make sure to budget accordingly.
Remember Property Taxes
Don’t forget about this added extra. Property taxes are public information and can be found on the county website where the property is located or at the county assessor office. Property taxes will rise or decline over time but typically rise. For the most part property taxes are escrowed into your monthly mortgage payment (if you are lucky you might get some back at the end of year). Simple math dictates a monthly payment by taking the total amount of property taxes for the year and dividing it by 12 for your monthly payment.
Failing to get a Home Inspection
Not to much to say here, spend the money to get a third party home inspection. It is well worth it in the end, the seller “might” forget to disclose some stuff. Here are 10 questions to ask when getting a home inspection.
Add Contingencies
Don’t forget to add contingencies into the purchase agreement, whether they be a financing, inspection or any other contingency that can be thought off. These are your out clauses, if a home doesn’t pass the inspection and no new terms between buyer/seller can be agreed upon, the purchase is cancelled. If you can’t get financing for some crazy reason (job loss, loan falls through, et al), you want to receive your earnest money deposit back and not be obligated to purchase the house.
Finding the right mortgage
So many hours are put into finding the right home, why not spend more time on finding the right mortgage? This is just as important when it comes to finding a home, after all you are going to be tied to for 30 years. Make sure that you are pre-approved and have taken in all the factors when it comes to buying a home in Minnesota.
I’m sure there are more, if you have any pitfalls to add to the list go ahead and add them to the list.
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This is a really thorough article. Thanks for the info