Buyer’s Choice Realty blog

Many common mistakes that buyers of real estate make can usually be avoided. Here are a few mistakes many buyers make, and some ways to avoid them.

#1. Buying before selling. It sounds simple, but the lure of that new house can have an overwhelming effect on your finances. Sell the home you currently own before buying a new one. Sure, bridge loans can be obtained, but in the current buyers’ market, who knows how long your home will be on the market before someone purchases it? Unless you are able to pay cash for that new place, wait until you are certain your home sale will close before placing an offer on another piece of property.

#2. Continuing to look when it’s time to make an offer. This mistake, most often made by first-time buyers, is very common. Many folks think they must look at 30, 40, 50 properties before making a decision. If you see property you like, it fits your budget and needs, and you envision yourself living there, pull the trigger! Assuming your real estate agent is working for your best interests only (as Exclusive Buyer Agents are, hint hint), they should have a good idea of what you are looking for in a home based on your preliminary interview, and should be knowledgeable about what’s on the market as well as what’s not. They are likely to show you the properties that match the majority of your search criteria first. Don’t fall into the trap of feeling anxious because you feel haven’t looked enough. Remember, this is only the first part of a long process. Be grateful it was easy.

#3. Waiting for prices to drop. In most towns, real estate prices have dropped significantly over the past few years and show few signs of increasing. Many buyers fear paying too much for their home. Keep in mind that real estate is cyclical, so prices will move up eventually. There is no failsafe way to ‘time the bottom’, and you should take the long view. If you are planning to spend more than a year or two in the home you are purchasing, don’t worry about short term price changes. Focus on finding a great place that you can afford. Large price drops are very uncommon in the short term, so don’t fret. Either way, it is almost always a better use of your money to make mortgage rather than rent payments. History shows us that real estate has been one of the safest and lucrative investments ever.

I’d be happy to discuss your home buying wants and needs if you are thinking about starting a home search. I work only for buyers and as such have your best interests in mind at all time and my only loyalty will be to you. Call me at 800.25.BUYER (ask for John) or email me.

Check back soon, as there are many mistakes buyers make that I have yet to cover. An educated consumer is the best consumer.

President Obama announced a plan today designed to help millions of homeowners around the country. While final details and rules & regulations will not be announced for two weeks, we learned some details today. The plan is scheduled to begin March 4.

Some homeowners will be able to refinance their existing mortgages, only on owner-occupied properties. There are several criteria they must meet. Owners must be current on their mortgage payments, must have a conforming loan (less than $417,000) that is owned or guaranteed by Fannie Mae or Freddie Mac, and apparently must owe more than 80% of their home’s value. Currently, lenders are not likely to refinance loans for borrowers who have less than 20% equity in their home. A further caveat: the new mortgage and refinancing costs must be no more than 105% of the current value of the home. Obama’s administration predicts that this plan will help up to five million “responsible homeowners.”

This initiative also aims to bring mortgage payments down to no more than 31% of borrowers’ income. The goal for this portion of the plan is for lenders to reduce interest rates on loans to bring monthly payments down to 38% of income and the government will further subsidize lenders and servicers to bring the ratio to 31%.

Check out this article from CNN for more information on this hot-button issue.

There are plenty of details surrounding this plan that I haven’t included, such as the government throwing more money to Fannie and Freddie, etc., with the end goal being to keep mortgage interest rates down for some time.

What do you think? Is the plan going to work? Will it really help millions of at-risk homeowners?