Similarities between Buying a First Home and the First Day at College

Do you remember your first day of college? The excitement, setbacks, and anxieties you experienced? Remarkably similar emotions are experienced by first time homebuyers. 

Buyers are always looking out for a perfect home. The sky is the limit as far as expectations are concerned. They hope to find an affordable home with the best schools nearby, a huge yard, and many more things.  

New college students have great expectations. They’re motivated to use money judiciously, tackle the challenges of higher education, attain high scores, and work hard to subsist. 

There are some additional similarities in the experiences of first-time homebuyers and first-time college goers:

Milestones

Students beginning college move out of home into new environments away from friends and family.  They take on additional responsibilities and get set to enjoy their freedom.  It’s a huge transition phase.

New buyers consider purchasing a home as a transition into adulthood.  Homeownership involves a major commitment with regards to money and time.  With a home purchase, buyers get set to plant roots in a new community.  They can now finally unpack all boxes and settle into a place called home.  They get ready to accept responsibilities related to home payments and maintenance.

Buying a home and going to college are both major accomplishments which represent maturity.

Lengthiness

The process of getting admission into a suitable college sometimes takes months.  Teenagers are required to prepare for qualifying tests, apply, and wait for acceptance.  Then there’s paperwork and orientation. On the day college begins, they’ve got to move around an unfamiliar campus in search for their classes. Getting into college and adjusting to it can be a really stressful process likely to test both confidence and patience.

Buying a home is a time-consuming process too which requires a lot of patience.  Buyers need to get their loan pre-approved before beginning their house hunt.  Focusing on the correct home requires great persistence in attending to open houses, searching online, and staying connected with realtors.

Bids can be turned down.  Even after the offer is accepted, a lot of work is required to complete the buying process.  There are inspections, loads of paperwork, and a lot of communications with the lender.  Buyers feel quite exhausted and long to hold the keys of the home in their hands.

There are hordes of stressful steps involved both in getting into a home and into a college. Both processes require tremendous persistence.

The Learning Curve

Students new to college struggle to remember acronyms which refer to classes, departments, buildings and books and keep referring to their orientation manuals. They face many other newbie challenges. Eventually they get familiar and then things aren’t quite as tough.

First-time homebuyers also often get tied up in knots when they meet their lender to discuss loan options and interest rates. All the numbers and real estate jargon can be truly mind-boggling. Making long-lasting decisions without being clear can be a real challenge. It takes a while for everything to get sorted out smoothly.

When you’re new to college or to the home buying arena, it’s of utmost importance to study the topics and processes as best as you can. And ask questions – lots of them. Speaking to experts is one of best ways to get the right direction pointed out.  This helps in getting the confidence to move forward.  

Be sure to consider the advantages of knowing the true value of your home. You can obtain a free home valuation report from Neighborhood IQ to find out how much a property is worth, especially after your fall and winter home improvements and maintenance projects are completed. Also, the Home Loan Advisor can analyze your property, current market conditions, local market comps, and other variables in our proprietary algorithm, and match you with potential lenders.

Budgeting Mistakes of First-time Home Buyers

The experience of purchasing your first home can be both exciting and stressful. Like in all first-time situations, the probability of committing “newbie” errors is high. This especially happens in the case of the budgeting of funds to cover all expenses before and after the house purchase.

Some typical budgeting mistakes are made by buyers going in for their first homes. Though these errors are understandable, they can prove to be quite costly. If you’re aware of them, you have better chances of avoiding them.

Lack of affordability knowledge

Many buyers envision their first home as a castle or a dream house. But a first home most often has very few features of the dreams of young home buyers. You need to have a clear idea regarding how much you can afford to spend on your home before you begin shopping.

Make it a point to invest more time in researching for suitable financing options and understanding the effect of debt ratios on mortgage approvals rather than in judging design preferences and home styles. Once you know what exactly you can afford, you’re in a better position to make a judicious choice from the options available.

 

Incorrect assumptions

It’s true that everyone is thrilled to get a deal. But it’s highly erroneous to assume that every foreclosed or short-sale property offers a fabulous deal. This may be true in some cases but in the real estate market, a property is only worth as much as a buyer is ready to pay for it.

Experts in the real estate field know that it’s quite likely that properties which appear to be bargains often have serious HVAC, plumbing, structural, or other problems.

Inappropriate buyer's agent

A seller's agent has the responsibility of getting the best deal in terms of the highest sale price possible for a home seller. Similarly, a buyer's agent needs to represent the buyer's interests and try to get a great deal from the buyer’s perspective.

If you pick an inappropriate buyer's agent to represent you, you could be down by thousands of dollars by the end of the transaction.

Underestimating total costs

If you do not correctly gauge the real costs associated with home ownership, you’re in trouble. When you’re staying on rent, you can call your landlord when anything goes wrong. But when you become a home owner, this option is eliminated. The complete responsbility is on you.

So even if you’re buying a brand-new house, some things may go awry and you’ve got to solve all issues yourself. You would generally need to spend money to resolve the problems because you cannot be a master electrician, plumber, and everything else yourself. So make sure you plan for repairs, maintenance and emergencies. Also, remember to budget sufficient funds to take care of moving expenses.

No contingency clause in sales agreement

Today, most standard Sales and Purchase Agreements contain contingency clauses. While sellers would prefer not to have these clauses, they are of utmost importance from the buyer’s perspective. If you do not receive the required mortgage, the purchase will not be possible.

If you do not have a clause regarding this in the agreement, you don’t have a way out and your seller can refuse to return your deposit. Also funds spent for things like land surveys, appraisals and home inspections are forever gone. So make sure you have contingency clauses in the Sales Agreement before signing on it.

 

Don't make the mistake of not knowing the value of the home you want to purchase! Neighborhood IQ offers a free home value report that will tell you what a house is worth so that you can budget accordingly. Also, the Home Loan Advisor can analyze your property, current market conditions, local market comps, and other variables in our proprietary algorithm, and match you with potential lenders.

10 Common Mistakes that Home Buyers Make

Declining home prices and low mortgage rates are great reasons to buy a home right now. While you may be eager to purchase a new house, you shouldn't act too impulsively. You could forget to do certain necessary tasks in your hastiness.

When armed with the right information, you can effectively crunch your numbers and reflect on the big picture as well as your property choices. If you are about to become a home buyer, you need to avoid these common mistakes that many people make, especially first-time home buyers:

1. Failing to anticipate the costs- There are numerous expenses to buying a home, and many are not prepared budget-wise. Consider all the fees associated with closing costs as well as any necessary repairs or maintenance. Also, you may have an increase in utility costs.
2. Not knowing your credit score- You can get lower interest rates on your loan when you have a good credit score, so find out what yours is as soon as you can. The lower your credit score, the higher your costs of borrowing will be.
3. Not taking the time to find the right real estate agent- You need a knowledgeable agent who takes your needs and desires seriously. They should also be patient if you are first-time buyer. The right agent has your wants in their best interest.
4. Buying when you expect to move too soon- If you are planning to relocate for work or move closer to family, buying is a bad idea. If you aren't willing to stay put for five years, don’t buy.
5. Failing to get a home inspection- Simply put, you need to know what you are buying. You should hire a professional inspector to avoid buying a lemon of the house. Otherwise, you may be buying someone else’s problems such as electrical issues, mold, poor insulation, termites or plumbing problems, to name a few.
6. Assuming a foreclosure is a great deal- These homes owned by banks or lenders aren't always the bargain that you think you are getting. While the price may be low, the house may need extensive and costly repairs, especially if it has been sitting vacant for a long time.
7. Overbuying- Spending and borrowing the maximum amount for your home could wind up being a bad idea should the unexpected occur such as a pregnancy or illness.
8. Not assessing your financial situation- When you don’t examine your finances, you misunderstand what you can afford. This can lead to spending beyond your means.
9. Buying a home right before the purchase of a car- This could lower your credit score and will also affect your debt-to-income ratio, which is a key factor in the loan-qualifying process.
10. Accepting verbal agreements- It should go without saying that you need to get everything in writing.

If you aware of the above mistakes, you can potentially avoid any headaches during the home buying process. Common mistakes are usually the result of rushing, so take your time when searching for a home, making an offer and closing the deal. Awareness is the first step in the avoidance of missteps.

Not knowing the value of your home is yet another mistake that you don’t want to make. In order to make sure that you get the best deal for your money, consider getting a free home valuation report from Neighborhood IQ. It will give you the peace of mind that you need.