home_image_1The Chicago Tribune published an article with some advice for homebuyers, including some mistakes to avoid. With the extension of the First-Time Homebuyer Tax Credit, the housing market has seen an upswing in activity. While there are great bargains and government programs that make it easier and more desirable for people to purchase a home, there are certain things to remember to make the process even smoother. We’ve summarized some of these items here.

1. Get pre-approved to eliminate fears

It is exciting and enticing to want to find the perfect home and spend a good amount of time house hunting. However, experts warn that your first step should always be the financial step. Take care to educate yourself on what it takes to get pre-approved. Know the difference between mortgage pre-approval, which is a loan commitment, and pre-qualification, which is a non-binding estimate. Getting pre-approved requires you to sit down with a loan officer so that they can make a firm loan commitment to you. This is the most important thing to do, especially for a first-time homebuyer, at the very beginning of the home buying process since it helps you to be more efficient in your search and it removes some of the fear of wondering whether you can afford the beautiful new home you just saw.

There are financial benefits to taking care of this step first. With the help of a loan officer, you can get good advice about the different loan programs as these things change daily. In addition, these professionals can help you determine when exactly to lock your rate in. Pre-approval also gives you more negotiating power as the buyer. Once you find a home you are interested in, the transaction has a better chance of closing and closing quickly since the loan commitment is already in place.

2. Work with a real estate agent

Buying a home is something that requires the help of a professional in the real estate industry. With the increased oversight and tightened credit throughout the market, you need a professional to help navigate the waters. Again, purchasing a home is not simply finding a place that you like. You need to understand the market and how the price points are being affected.

Working with an agent is a good decision – so long as you are working with a good agent. To be sure you have a good fit, interview several agents to see with whom you feel most comfortable. An agent should be a good listener and someone equipped to understand your needs. Even referrals should be interviewed, as someone who is a good fit for someone else may not be a good fit for you. You never want to feel pressured into a purchase, especially if you are a first-time homebuyer.

A good agent will help you determine what you are truly looking for by helping to separate your needs from your wants. Buying a home can be an emotional process and your agent is there to help you sift between that emotion and the straight facts.

3. Do your homework

Part of completing the financial leg of the home buying process is making sure you are fully informed on all the government or other home buying credits and programs available to you. Currently, the First-Time Homebuyer Credit is the most popular program available as it allows eligible buyers to receive an $8,000 tax credit for homes purchased before Dec. 1, 2009. Some important conditions to remember, according to the IRS:

  • The transaction must close by Nov. 30, though industry groups are lobbying Congress to extend the tax credit.
  • The home is the taxpayer’s principal residence; rental or vacation homes are not eligible.
  • The buyer must live in the home for 36 months after purchase; otherwise, the credit must be repaid.
  • The taxpayer and his or her spouse are not eligible for the credit if either one has owned a home in the three years prior to the eligible purchase.

buying-a-house4. Focus on reality

It is easy to get caught up in the romantic aspects of buying a home, such as the aesthetics, but it’s important not to overlook important items and questions:

  • Commute time to and from work
  • Is the home near public transit stops or a train if you use them?
  • How close are you to grocery stores, restaurants, and schools?
  • What are the landscaping needs of your property?

5. Stick to your guns

It is easy to be influenced by others’ opinions; however, this is one of the most important situations in which you need to stay true to yourself. Input and constructive criticism can be helpful in drilling down important details of your new home, but at times it can derail a home purchase. This is a place you will ultimately call home, not your parents, friends or siblings.

6. Focus on what’s right – not just the price

While getting a great bargain on a home can feel exhilarating, it should not be your sole reason for purchasing a home. With the myriad of deals and credit programs available, many homebuyers are getting wrapped up in the idea of getting a steal, rather than really falling in love with a place.

Many homebuyers are also pursuing short sales, which are anything but. They are long, involved transactions that have uncertain outcomes as buyers may get all the way to the closing table with no signed contract. Short sale homes are also sold in as-in condition, and some people don’t realize the extent of repairs that are necessary on some of these homes.

Purchasing a home is an involved but rewarding experience. By ensuring you have done your due diligence as a buyer, the process can be smoother and more enjoyable.

Do you have a story of an instance when the home buying process did not go smoothly for you? Or perhaps you have a wonderful story of a positive experience purchasing a home. Either way, we would like to know.

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