Buying a home in
Florida is the biggest purchase most people will ever make, yet many go into it
blind. Here are the most common, and costly, mistakes home buyers make:
Not knowing your credit score. If you’re even
toying with the idea of buying a home, you must find out exactly what your FICO
score is. Go to our free soft credit pull.
This soft credit report is accurate and doesn't effect your score.
Pre-Qualify/Soft Credit Pull
If you find your score is less than ideal, wage a systematic campaign to raise it. Too many borrowers ignore this step and get surprised when they get interest rate quotes.
This soft credit report is accurate and doesn't effect your score.
Pre-Qualify/Soft Credit Pull
If you find your score is less than ideal, wage a systematic campaign to raise it. Too many borrowers ignore this step and get surprised when they get interest rate quotes.
The lower your
score, the higher your costs of borrowing.
Buying a car before a house. Anytime consumers
open new credit accounts — credit card, auto loan, etc. — their FICO score
could drop, hence the admonition to not open other new accounts while your
mortgage application is in process.
A big purchase would
use up a considerable proportion of a borrower’s total credit limit, which
results in a drop in the score. Lenders often continue to check credit scores
in the weeks before closing. The lender will likely slam on the brakes if the
applicant’s credit scores have suddenly dropped below the minimum required for
the requested loan rate.
Skimping on the home inspection. It’s vital to
find all the costly flaws before you buy. Many homes on the market today
are distressed properties — foreclosures and short sales — and that
only increases the importance of good inspections.
A home inspection
can find problems with the foundation, electrical, plumbing, roof, attic
insulation, and heating and air conditioning. Often home buyers, who may be
strapped for cash, stint on inspections and look for the cheapest way to go.
That can lead to disaster. The cost of repairs far exceeds the cost of
inspection.
No
contingencies. When signing a sales contract, buyers usually have
to put up 1% to 3% in “earnest money,” which they don’t get back if they pull
out of the deal except under certain conditions spelled out in the
contract. Sellers try to limit the grounds for canceling, and
inexperienced buyers may sign contracts that don’t include common exceptions,
such as uncovering major problems during the home inspection, failing to
obtain financing and failure of the house to appraise. Failure to obtain
financing is common these days because lenders have become very picky;
underwriting is very strict.
Even if your
mortgage company is still willing to finance your purchase, the house itself
may be worth less than you’ve contracted to pay for it, and the lender will
pull its approval.
With residential
real estate markets still slow, sellers usually accept contingency clauses, but
if they resist, it may be better to rethink the deal. Losing a deposit of
$2,000 to $6,000 on a $200,000 home hurts.
Not budgeting for insurance. Don’t
underestimate insurance costs and fail to budget for them. Many home buyers
don’t understand just what is — and what is not — covered. Standard policies
pay for theft and wind, fire, lightning, hail and explosion damage.
Not covered is flooding, earthquake damage or problems caused by neglect of
routine maintenance. The most important thing before you buy a home
is to find out what it will cost to insure it, insurance needs to be calculated
into the cost of owning a home. Unlike a mortgage you can pay off, you’ll be
responsible for insurance costs forever.
Our brokers at
Florida Mortgage & Loan have the knowledge and experience and are happy to guide you
through every step of the Florida home buying process.
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