Getting into real estate is undoubtedly one of the most competitive ventures in today’s market. Courtesy of countless people who acquire their business or personal-use properties daily, one might struggle to make their first purchase. According to Sean Francis Tucker, a student who has some first-hand experience with these issues, there are innumerable barriers to entry. The most obvious one, however, is lack of knowledge. After all, real estate is a complex industry with a lot of variables and a lot of money at stake. So, what are some of the most important tips that should be taken into consideration?
Start Saving Early
Although it seems fairly obvious, a lot of people overlook the importance of starting to save their capital for a down payment early. Given that 15 to 20 percent of the home’s value will often be required up front, one may face an extremely large expense here. Unfortunately, a lot of new buyers push this obligation aside under the assumption that their mortgage will help them cover it. Well, lenders are seldom going to approve full-ride loans that help pay the value of the home in its entirety. Doing so would be counterintuitive as they need to have some assurance of financial eligibility from their clients. Thus, starting to save money as early as possible is going to increase the likelihood of getting approved for a loan as well as having a smaller interest rate.
Keep Track of All Costs
Another important misconception that leads to financial difficulties is that the property and home values are the only expenses. In reality, however, that is quite the opposite of the truth. To just name a few other important costs, one must look into appraisals, inspections, attorney fees, realtor fees, and much more. These can end up costing another 10 percent or more of the overall home value. Thus, anyone who fails to account for them early on may face a lot of difficulties paying when the time comes.
Apply for a Mortgage Before Looking at a Home
As Sean Francis Tucker advises, applying for a mortgage before looking at a house is the proper prioritization. The reason why boils down to the emotional connection that one may develop with a specific house. Consider, for instance, how upsetting it would be to find a dream home and then learn that it is more than one can ever get a mortgage for. Thus, looking at properties and not knowing if the banks will be onboard with them is a mistake that can result in a lot of wasted time.
Focus on the Neighborhood, Not Just the House
When it comes to the mistakes that happen from the perspective of focusing on the house itself, people also overlook the importance of a good neighborhood. In other words, someone may like a specific house enough to neglect the area in which it has been built entirely. The problem with this approach is the fact that the owner will not spend all of their time inside of their residence. Obviously, anyone with a family and children will need to take a very close look at the local schools. Moreover, ensuring that the area is safe and has a positive track record with a low crime rate is crucial. Such factors can determine if the house will be lived in for a long time or if the owner will be in the market again soon.
Inspecting the Home
Before finalizing the decision to purchase a home, there will be a mandatory inspection of the property. A lot of buyers, however, leave this to an independent third-party who comes in to analyze everything and write up a professional report. Unfortunately, not every inspection will account for every important factor that a prospective homeowner should know. For instance, certain agencies will not test for things like radon or mold. Others may simply not go into enough depth with certain areas of the house. To help combat issues of this nature, the prospective homeowner should always do their research and be present during the inspection. Doing so will make it much easier to hold people accountable and ensure that they are indeed conducting a worthy examination of the entire area.
Ultimately, it will be impossible for a first-time buyer to avoid making any mistakes. The process of purchasing real estate is a complex venture that is only effortless for those with a lot of experience. So, a great start would be to talk to individuals who have that experience and learn from their mistakes.