If you’ve been reading my newsletter or blog regularly, then you know that it’s an excellent, excellent time to be a Houston real estate buyer (click here to search Houston Homes For Sale). Interest rates are incredibly low & prices have retreated to previous years’ values. If you’re in a position to buy, NOW IS THE TIME before prices and interest rates start moving up!
BUT…and isn’t there always a BUT?....just because it’s a great time to buy, don’t get caught making a huge buyer mistake.
There are 4 major pitfalls you must avoid if you’re going to be a smart, successful Houston home buyer that is able to capitalize on today’s opportunities.
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Pitfall #1….Not Getting Pre-Approved
Before you start house hunting, the first step is to get pre-approved.
Because of the new lending standards that have come into play, it’s important to have what you think you can afford verified by a trustworthy and reliable source. Loans are harder to solidify than ever before and you’ll save yourself a tremendous amount of time and emotional heartache if you make this your first step.
Don’t get a pre-approval letter from your top internet search, however. Look for a professional who is trustworthy, proactive and over communicates. You need someone who will review your credit, income, assets and debts. From there, they can make a recommendation on the ideal monthly payment that corresponds with your budget.
By getting pre-approved first, it not only sets you up for a successful home buying process, it also lets sellers know that you're serious about buying. With about 1/3 fewer buyers in the market these days, notifying sellers that you’re pre-approved up front makes them more comfortable in your ability to close on a transaction and makes the negotiation process smoother.
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Pitfall #2…Buying More House than You Can Afford
While a lender will pre-approve you for a home that matches your income, it might not mean that you can really afford that monthly payment. Just because a lender is willing to loan you a ton of money, that doesn’t mean you should use all of that credit line.
Look at your lifestyle and how you spend your discretionary income. Make sure that when you add on a mortgage payment to what you currently spend, it’s something that you can and are willing to handle – not just for today, but for as long as you own the home.
Buying more home than you can really can afford quickly leads to financial trouble. Typically, your mortgage payment should be less than 28 percent of your gross monthly income. Additionally, be prepared for additional ownership costs, such as home owner’s insurance, flood protection, property taxes and utilities.
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Pitfall #3….If It Sounds Too Good To Be True…
No doubt, there are good deals in today’s market.
Sometimes, though, getting a killer deal isn’t all it’s cracked up to be. In an effort to find a bargain, potential homeowners may overlook all else in effort to get a low, low price. They may sacrifice location, condition or resale potential to get the “best deal.â€
While a low price is ideal for buyers, remember that you get what you pay for.
Make sure you’ve had thorough inspections, know what possible renovation costs may be and double-check the market data to confirm the price. There’s nothing worse than getting a “great†deal, only to find out that you have to pump thousands of dollars into a property to bring it up to speed or that the location is a bust.
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Pitfall #4…Sacrificing tomorrow for today
Always, always think about the future.
At the end of the day, while you’re buying a home – a place that provides shelter and emotional satisfaction for you & your family – it’s a HUGE investment.
For most people, their homes are the largest asset in their portfolio. So, while there are aspects about a home that might be perfect for you, make sure that those aspects aren’t so unusual that you’ll have trouble with resale.
A good rule of thumb to follow is if there is something challenging about a home that you can’t change, you’ll have to accommodate for that shortcoming with a lower price when you resale.
For example, if the house is painted purple, that’s something you can change. If the house is located next to a 24-hour truck stop that turns on strobe lights every night at 12am, you can only “fix†that with price.
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Avoid these pitfalls and a few more buy hiring an experienced and reputable Houston Realtor to help you along your journey!
If you need a list of questions to ask when hiring your agent, please let me know and I’m happy to provide you with a questionnaire.
Additionally, if there is anything I can do to assist you in your Houston home search, feel free to contact me at 713-384-5177 or paige@houstonproperties.com. Happy Home Buying!
