Seven Important Tips For Home Buyers

Here are the top seven home buyer mistakes:

1. SHOP FOR A MORTGAGE FIRST.
More than 70 percent of today's home buyers start their quest on the Internet. But that's the wrong place to start. The first step is to check your FICO credit scores to be certain you can obtain a mortgage. Check your credit at www.myfico.com for about $45. You get reviews from the three national credit bureaus: Equifax, Trans Union and Experian. By checking credit reports you give yourself time to correct any errors. About 30 percent of credit reports contain mistakes. Tip: Don't use the FREE reports because some don't include FICO scores, which all major mortgage lenders need.

2. GET A WRITTEN MORTGAGE PRE-APPROVAL. Armed with your credit reports and FICO scores (a 700+ score will get the lowest mortgage interest rate), it's time to shop for WRITTEN mortgage pre-approval. Although mortgage brokers can arrange pre-approvals, be sure your pre-approval letter or certificate comes from a bank or mortgage broker. Disregard the "pre-qualification letter," it is NOT a lender's written promise to grant you a home mortgage.

3. RESEARCH THE LOCAL MARKET. After you have your written mortgage pre-approval or certificate from a lender, it's time to researching the local home market. Take a couple of months to research the market. Don't just buy the first house you see. Get to know what's priced right, and what is not.

4. USE A BUYER'S AGENT. Many buyers purchase with only a seller's listing agent. But did you know it costs you no more to have your own "buyer's agent" representing your interests? Buyer's agents, in addition to showing MLS listings can show the local "for sale by owner" (FSBO) homes. FSBO sellers are usually happy to pay buyer's agents half of a normal sales commission. This is a big advantage! Use a buyer's agent. Did you know? Any licensed real estate agent can also be your buyer's agent... unless that agent works for the same brokerage which also listed the property for sale. In that case dual agency (or designated agent) rules apply.

5. LOOK OUT FOR INCURABLE DEFECTS. Almost every property has defects, even brand-new houses. Most defects are fixable. But look out for serious defects like a hard-to-change floor plan, terrible location, loud traffic, no parking, etc. Things you can't change are incurable!

6. GET A CMA BEFORE MAKING AN OFFER. A CMA (Comparative Market Analysis) is a document that includes recent sales prices of similar (and nearby) homes, asking prices of comparable neighborhood homes currently listed for sale, and asking prices of similar homes that didn't sell (perhaps because they were overpriced). Only after studying a CMA can a reasonable purchase price be offered. Most CMA's are done for sellers, but buyers should use them too!

7. INCLUDE CONTINGENCY CLAUSES. There are two main clauses you should include. Smart home buyers include contingency clauses for (1) a satisfactory professional appraisal of the home for at least the purchase price, and (2) the buyer's approval of a professional inspector's report. There are other important ones, but these are the most important.