Many people are afraid to jump into the housing Market due to their fears. As REALTORS, we want to address your fears up front so that we can see if there are ways to manage them or over come them. That is one of the reasons that a good REALTOR will do a Buyer Consultation with you before showing you houses. We need to know what your concerns are so we can help you determine if home ownership is for you. Here is a list of some fears we have encountered over the years at the Pat Wattam TeamBAton:
1. Fear of Maintenance Costs: This is a concern for anyone buying a house - whether you are a first time home buyer or a move up buyer. If you have been a renter for a long time and are used to your management company handling all repairs then one of the things you need to understand from day one is now all those expenses are yours. You need to put money away every month into a special account that you only use for home maintenance. Another way to ease into home ownership is to own a Condo where the exterior maintenace is covered by your Home Owner Association. But in my opinion, the best thing you can to is make sure you get a Home Owners Warranty for your new home. These typically cover mechanical issues such as air, heat, and built-in appliances, but also some wiring and plumbing. Each company has different offering so check them out. Many times a seller will offer one or you can ask for it when you make an offer on their house. One of the biggest expenses in owning a home is replacing a roof. Because of the weather we have had since 2008 you can expect the home to have had their roof replaced at some time since then! As a buyer, one of your costs in purchasing a home is paying for a home inspection. This is some of the best money you can expect to spend. The inspector will let you know if the house has any serious issues and you can then ask the seller to fix them (just remember, a home inspection request for repairs isn't going to turn an older house into a new house) and they usually let you know if there are future maintence items that you should save up for.
2. Loss of Value: This only comes into play when you want to move. We own a beach condo in Alabama that is worth a little more than half of what we paid for it. Doesn't matter. I don't intend to sell the property. But what if I HAD to sell? I have some money stashed away that would covere the difference between what I owe and what I could sell it for. And as we have found out in 2008, sometimes your mortgage company will work with you. We can't control the economy, the world situation, terrorism, unemployment, etc. The main thing is to buy wisely. If you buy a typical home, in a neighborhood that historically has sold well in all markets, in a price range that is pretty average, then you have hedged your bets for any downturn. If you don't plan to stay in the area for a long time then be very careful when purchasing.
3. Loss of Deposit: Louisiana is not an Ernest Money State but a Specific Performance State. The Purchase Agreement spells out how a buyer gets their deposit back such as: A. Not Able to Obtain Financing B. House doesn't appraise and seller does not agree to reduce price to appraised value C. During inspection Period. However, it does not allow for the buyer to change their mind, do something to prevent the from qualifying (remember, you will have a letter from your lender when you make your offer so there is proof that you did something that made you no longer qualify). The Specific Performance in Louisiana says that if you default the seller can sue you to complete the sale or 10% of the value. You would also be exposed to pay real estate commissions, etc. Entering into a purchase agreement is a legal document. Be very prepared to perform.
4. Being Unable To Afford Your Mortgage Payment: First, don't even think about buying a house until you have spoken to a lender - preferably a lender that has been recommended to you by someone you trust. Determine upfront the cost of buying a house and what kind of payments to expect. Then all I can say about this is to be sure you are ready to be a home owner. One of the requirements by lenders is that you have residual money - meaning you have enough money saved to make several months of house payments. You need to always have that in a special account that you only tap into when you are desperate. Those days of the crazy mortgages where the house note goes up every year or has a balloon payment are pretty much gone. I tell couples to try to qualify for a house on just one income. That really comes into play in case one of them cannot work. The loss of a job is one of the biggest reasons why people can no longer afford their homes. Most people wait too long to put their home up for sale when this happens, thinking things will turn around - and usually they are right. But how many months do you wait? 3 months would be my limit. Remember, if you are conservative in what you qualify for, if something happens you should be in good shape and still able to afford your home.
5. Buyer's Remorse: You are afraid you will buy the wrong house, or a better house is just around the corner. I can tell you that a 'better' house is always just around the corner. New homes come on the market everyday. You will be paralysed if you think like this. Know what the 'must haves' are for you in a home. Make your wish list too. Then you will love whatever home you purchase. I tell people that anyone can make any house their home - just by bringing in your personal touches. Try to find a home that meets your Must Haves and a few of your wish list too - then you will be happy! Be sure to share that list with your REALTOR and they can tell you if it is realistic in our Baton Rouge Real Estate Market. If they tell you that what you want is impossible for the price you are willing to pay, then you have two choices. Save up more money to buy the kind of home you want or delete things from your list until you find homes in your price range.
Homebuying should be a fun and exciting time in your life. We want to be part of that process with you! Start with this video on 8 Steps to Buying a Home. Then don't hesitate to call us at the Pat Wattam Team anytime for a free consultation. 225-978-6688.