Five Mistakes Home Buyers Make

Affordable home prices and historically low interest rates have created an ideal situation for many qualified first-time home buyers to purchase a house.  Despite this opportunity, some buyers may be overconfident and make mistakes during the home-buying process.

MAKING SENSE OF THE STORY FOR CONSUMERS

• Some first-time buyers are unaware of the vast amount of paperwork and negotiations that go into purchasing a home.  As a result, buyers may think they can save money by forgoing the use of a REALTOR®.  However, managing the nuances of offers, inspections, financing, and other pivotal steps when buying a home often causes confusion and anxiety for buyers.  Working with a REALTOR®–who is obligated to put the buyer’s best interests first–will help to alleviate buyer concerns during this process.
• Online mortgage calculators can help buyers estimate the amount of house they can afford, but calculators should not be the sole source for mortgage-approval information.  Buyers are advised to meet with a mortgage broker or banker prior to beginning the home search to help determine the loan amount for which they are most likely to be approved.
• Although there is a large selection of homes available for sale, home buyers should not assume they can make low offers or unreasonable demands.  Even in hard-hit housing markets, homes in desirable neighborhoods are receiving multiple offers.

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Source: The Wall Street Journal – September 1, 2010

5 Reasons Homeownership Trumps Renting

The seemingly endless run of bad housing news is discouraging some potential home buyers from considering a purchase. But the truth is that the advantages of homeownership have very little to do with investment gains. The best things about owning a home have a lot more to do with personal comfort and satisfaction.

Here are five of them:

• Be your own landlord. The bank can only kick you out if you don’t pay; a landlord can be much less dependable – deciding to sell the property or choosing to live there themselves.
• Paying the principal is forced savings. Yes, it’s possible that home prices will fall further. It is also possible that your 401(k) will lose value. But over the long haul, both are likely to enjoy modest gains in value.
• Fixed-rate mortgages never rise – and eventually you pay them off. With mortgage rates at record lows, people who buy now are locking in real bargains.
• Good schools. Family-sized rentals are harder to come by in areas with excellent public schools.
• Spacious properties in pleasant neighborhoods. Sizable homes in attractive communities are almost always owned – not rented.

Source: The New York Times, Ron Lieber (08/27/2010)