Agents Offer Own List of Pitfalls for New Buyers to Avoid

After reading “First-Timers Tell All” (April 9), we thought you might like an opinion from real estate agents in the home-buying trenches.

Here are the mistakes that we see many first-time buyers make and how to avoid them:

No. 1: Not planning ahead.

Start by requesting a copy of your credit report. Carefully examine it for errors and clean it up before you talk to a lender.

Are you currently renting? Check your lease for an early-release clause. If you’ll be subject to penalties, try to time your closing with the expiration of the lease.

During this planning phase, consider your life over the next five to seven years. Do you plan to start a family? Will an in-law eventually move in with you? Will you be working from home? The number and layout of the rooms you require will depend on your answers.

If you qualify for financing based on a dual income, will you be able to survive on one salary in order to fulfill a long-range plan, such as one parent staying home to raise a child? Once you’ve answered these questions, establish a plan. Then direct the process with reference to the plan. Don’t let the process dictate to you.

No. 2: Failing to understand the home-buying process.

First-time home buyers need to ask questions. Lots of questions. So choose an agent who has experience working with the uninitiated and is willing to explain the entire home-buying process--from viewing homes to negotiating, to financing, to escrow and closing--in detail, and explain it again until you understand it.

No. 3: Getting in too deep.

It can happen when home buyers shop outside their budgets or overextend themselves. What can you do to avoid getting hooked? Monitor your expenses for a couple of months. Then, based on your findings, develop a budget that truly reflects your lifestyle.

It’s smart to ask your lender to pre-approve, rather than pre-qualify, you for a mortgage. Pre-qualification only tells how much you can afford. Pre-approval goes a step further. Your lender will evaluate your application, then clear you for a loan of a determined amount. Having your loan pre-approved makes you more attractive to the seller.

Once you learn how much of a home you can afford, stay within your budget. Just because you’ve been approved for a certain amount, doesn’t mean you’ll feel comfortable with monthly payments at the high end of the range. Ask yourself if you can live with these payments. Do they fit your established budget? If not, rethink your spending limit. Your new home should give you great pleasure, not hold you hostage.

When you relay your price range to a real estate agent, ask to view properties within that range only. By restricting yourself, you’ll avoid disappointment later on.

No. 4: Being ruled by the heart and not the head.

Curb appeal can be a powerful force. It’s the first-time buyer’s kryptonite. By disengaging the mental faculties, it leaves home buyers emotionally vulnerable. To counter its effect, you must be objective. Brutally objective.

Look at many homes, including an assortment of types of homes. When you view a property, list the positives and the negatives. Take along a tape measure and record the measurements of all the rooms. Make certain your furniture will comfortably fit into the space. Visit at various times of day to see how much natural light floods the rooms and check for changes in traffic patterns, especially at local rush hours. Have an inspector or engineer pick apart the property.

And recruit a friend to view the home and provide you with objective feedback. Ask if he or she can picture your family living there and discuss the whys and why nots.

Also, think about how long you plan to own the house. Would it be difficult to resell? List the negatives. Could you eliminate or reduce them?

No. 5: Buying into an unknown location.

Don’t stop your inspection at the property line. Examine the surrounding area. Is it safe, well maintained and moderately quiet? Is it convenient to work, schools and shops? Ask about zoning and that lovely forest of vacant land across the street. Could the highway nearby be widened in a couple of years? How far is the train? Within earshot? If you’re not familiar with the area, ask friends and colleagues about it. Do your research.

No. 6: Signing without understanding the financing.

Here’s where it helps to be a quick study. First-time home buyers have to contend with an assortment of mortgage types and the associated jargon.

Shop around and compare. When you decide on a lender and a mortgage, get every detail in writing, in particular, the lock-in rate, points and fees. And request a copy for your file. You should also request an estimate of your closing costs, which generally run between 3% and 6% of your loan.

Inquire about prepayment penalties. Have the lender attach an addendum to your contract that specifies that no penalties will be imposed for prepaying the loan. This step could save you a good deal of money.

Before you get to the table, read all the documents related to the purchase of the property, and have a professional review them. You’re signing a binding legal document. Make certain you understand the conditions of the loan.

Learn from the mistakes of others. It’s the best way to ensure a first-time home buyer a good night’s sleep.

JACQUIE ROBINSON

and GRAEME RAID

Prudential California Realty

Anaheim Hills