There are always risks that come with large purchases. You should not be fearful to buy Real Estate, but you should educate yourself on what kind of situations you may face and how you can prevent or deal with them.
1. Foreclosure. The risk of a foreclosure has recently become one of the biggest concerns for anyone considering home ownership. In an effort to avoid a foreclosure, you should work closely with your realtor to make smart mortgage choices, buy at a price you can afford, don’t use your home equity to finance frivolous things, make sure you have enough savings to carry you through a rough time and buy your home in a desirable neighborhood etc.
2. Spending more than you can really afford. Make a budget then stick to it. Especially when you are looking for a new home. Whatever you do, do not borrow more than you can realistically afford to pay back. You need to think ahead on this one – are you planning on having children or more children? Plan ahead about what you will do if you lose your job, repairs and maintenance for your home etc. You will need to make sure that you are not spending all of your income on your mortgage, not leaving enough money to put into savings for a bad day. Most mortgage companies have strict guidelines. So overextending yourself is less and less of a concern these days with the exception of unforeseen life events occurring.
3. Overpaying. Most people, after making an offer on a home, worry and wonder if they could have gotten a better deal. Would the seller have taken less? As long as you have been working closely with your realtor and done your homework with the area market comparables, then you probably have gotten the best deal possible. Most buyers are not going to accept lowball offers. There are always exceptions to this but your realtor more than likely knows when you can and can’t push it any further and will advise you of this before you sign the contract.
4. Buying a money pit. Almost everyone is a bit nervous when it comes to buying a home. However, that is what inspections are for. So don’t skip the home inspection process and you will have a lot less to worry about. You may also want to consider purchasing or asking the seller to provide you with a home warranty.
5. Losing your escrow deposit. You do have a period of time laid forth in the contract, that you can back out of the contract for any reason. However, you will lose your escrow deposit if you try to back out of the deal after that. At that point, the buyer has the right to keep your escrow deposit.
It is very important that you work closely with your Realtor throughout the buying process. This will help to lessen any potential risks you might encounter when buying a home and they can help you make smart decisions.
Thanks for Reading,
The Inman Team