Home Buyer Mistakes to Avoid

buying a home is one of the most terrifying things you'll ever do in your life i mean why isn't it you're getting into hundreds of thousand dollars in debt when literally maybe we've only had a few thousand dollars in debt up to that point why is it so terrifying well it's because it's the unknown we're afraid we're gonna make one mistake that's gonna cost us thousands of dollars and there are plenty of mistakes you could definitely make so in today's video what i'm gonna do is i'm gonna give you the top five most crucial mistakes you can make as a home buyer i don't care if this is the first time you're buying a house or the seventh time these are going to be absolutely crucial for you to try to avoid during buying a home regardless of the season or the market right now now this isn't going to be your mickey mouse bs get your pre-qualification done get your home inspection you can go watch the other realtors with that fluffy stuff this is gonna be real raw and personal okay that's a little a little too much is this gonna be good okay the first mistake you can make as a home buyer is simply using the pre-qualification as your only means of figuring out how much you can qualify for a house yeah if you go talk to a real estate agent and a lending mortgage officer they're going to say hey yeah you qualify up to x amount because when it comes to qualifying for a house if you're a w-2 employee which most people are they're basically using the gross monthly income gross not gross like ill gross like gross like before taxes before insurance before everything and how they determine if you qualify is they get either 50 of your gross monthly income if you're conventional or 56 percent of gross monthly income if you're fha and they don't give a crap about your budget they're going to simply try to qualify you for the most amount of money possible to get you into a house and collect their checks the formula they use to calculate this well they get your gross monthly income they multiply it by 0.50 or if you're fha point 56 and whatever that number is they subtract all of your monthly debts from it not the entire balances only the minimum monthly payment so let's say you and your partner make a gross monthly income of six thousand dollars let's say you guys maybe have about three to four hundred dollars of minimum payments let's make it four hundred dollars you're trying to qualify for a conventional loan so it's six thousand multiplied by point fifty so that's three thousand you subtract the four hundred bucks you and your partner qualify for 2600 you're thinking heck yeah man i'm gonna get a mansion i'm gonna go get me a blue couch this is insanity think about it you're not bringing home six thousand dollars you're bringing home maybe four thousand maybe even four thousand five hundred dollars depending on health insurance what kind of taxes are being taken out of your paychecks et cetera et cetera well a twenty six hundred dollar monthly payment would be not fifty percent of your income but fifty eight percent of your income and this is what we call house broke my friends you don't want to be in a position where more than half of your income that you depend on to survive in this country going to your house payment so what do you do well first and foremost acknowledge that when the lender pre-qualifies you they're using your gross monthly income they're using what you qualify for the max you should never be right at the top or the max of the number because like i said in this point they're not using your grenet they're using your gross so if you actually use your net income of course you're using more than 50 of that income so what you need to do is do some thinking before you talk to a lender or realtor sit down by yourself or with your partner or have your parents come in or whatever you want to do figure out what your net income is figure out what your expenses are and really figure out how much you can allocate towards a monthly payment for a house there's a lot of theories out there you know some people say 25 percent some people say 30 some even go as high as 35 percent and of course some of them use your gross or net i personally prefer use your net income and maybe stay around that 25 to 35 mark why i say it's different for people is because everybody has a different story right so for example let me share something personal with about me i have a three-year-old daughter who um she gets seizures every time she has a fever so something terrifying and i don't even wish it on my worst enemy so we always have to be aware of those medical bills that could pop up anytime she's sick so for us personally we would rather keep that percentage for the monthly payment down lower to 25 percent so we can use that extra 5 or 10 percent to save for any emergency hospital bills that might pop up with us maybe in your situation you have the ability to save more because you have really stable employment maybe you have a part-time job maybe you're only qualifying with one of your partners and the other partners all that is extra income you you'll know your situation you can go get your opinions online but you make your own conclusion a lot of people don't they just talk to the realtor lender and the goal in the whirlwind and next thing you know you're living above your means and those people will not be there to make your monthly payments i'm not talking bad about them it's just you have to look out for yourself first the second biggest home buyer mistake you can make is kind of in relation to the first one where you kind of have to protect yourself first before you talk to a realtor lender is get your savings together what you're going to be told is hey you need your down payment and you need closing costs and maybe some money for the inspection and appraisal and stuff and that's totally 100 true but once again if you're just going to do what you're told it's not going to be as efficient as if you prepare yourself of course have your down payment ready which could be three and a half percent if you're fha three five ten or twenty percent if you're conventional or cash hundred percent down can i brought some money and of course if it's a crazy uh housing market yes it would be helpful to have your closing cost saved up which could range two to three percent of the purchase price depending on the taxes and maybe extra fees that your area might have but these aren't going to be individual savings this is one category your house savings i made a video recently called do not buy a home until you watch this video and you should definitely watch it after you're done watching this one and in that video i briefly talk about this that's just your housing savings that savings needed to purchase your property you should have in my opinion an extra two savings here your second main priority one should be your emergency savings okay one of the biggest mistakes i have always seen and maybe this was okay when we were in a recovery market and you could make fifty thousand dollars just by owning a house for three years but it's not gonna be okay no more you can't blow your entire savings for just the purchase of your home and expect you to just make it up if you know after you move in sure maybe you could do it because you have a really great job but it's not reliably safe to move purchase a house with this assumption so to prepare for this have an emergency savings already saved apart from your house savings that could be two months reserves three months reserved six months reserves 12 months reserves i don't care i like to save 5000 because that's an easy number that's usually about two to four months reserves for most people have that aside and do not touch it if you want to have the liquid frozen i don't care but you need to have a separate savings for emergencies i always tell people this what happens if there's a medical emergency what if on the way to your your inspection you crash you just don't know what life will throw at you so please oh please oh please have this emergency savings ready to go and your third savings that i consider very crucial is have an extra you know maybe five even ten thousand dollars for just miscellaneous things that could pop up okay what could pop up well if you're in a crazy seller's market like it is right now in 2021 well maybe you might need an extra maybe two three four five thousand dollars to uh what one of my clients described as bribing the seller in other words if the house doesn't appraise then you have to give them two or three four five thousand dollars more it's insane yes but that's what a lot of people are doing if that's not the case maybe you need the extra money because you decided to buy a fixer upper and you're going to need some liquid assets to do some repairs right away if you don't end up using that money great you put it back into your emergency savings or you know maybe create another layer of savings i don't care but having these three sources ready to go is going to be much better than just your your your people helping you saying hey just have your down payment closing costs sometimes they require reserves in your pre-qualified if you have a kind of a sticky situation with your loan scenario in total but many times they don't require that so yeah please please make sure to get that ready the third biggest mistakes home buyers make is not having their timelines established what does this mean well uh people think oh i think it's time to buy a house now i'm just i'm gonna call my cousin realtor and see what's a process look like no first of all your cousin realtor needs to get rid of that editor haircut that's not 2009 anymore secondly do not rely on other people this is literally the freaking should be the title of the video do not rely on other people to make the goals for you get an idea of what the timing looks like if you don't know what that looks like i have a worksheet you can download below or let me just tell you now the second you decide to qualify for a home after that you get pre-approved it could take one to two weeks depending on your situation after you're pre-approved it can little be the next day you can go out find a house most people it takes about a month to find a house maybe even two if the market's really really crazy and after your house is under contract it could take another month to month and a half to close on your property so this is generally the normal timeline of how it looks like however there might be some wrenches thrown in there for example in the beginning once you do your pre-approval you might find out your credit isn't up to par yet so that might take another two to three months or even six months or a year to get your credit straight or maybe your closing date like maybe you literally have to be out of your apartment by two weeks from now well guess what it's not gonna happen it's not gonna happen that's what you needed to have started a month or two months ago or maybe you are three months away you're like fine i'm gonna call my cousin edgar to help me buy a house well guess what um your credit isn't good enough and maybe you should have called them six months ago so you can have some credit repair happening right if you know these crucial details you can negotiate things like post possession and pre-possessions you can make strategic decisions like that but you can't do it if you don't know your timeline but having all this knowledge you are going to be able to make your own decisions if your rules are trying to push you to buy a house and say hey this is the one make an offer you're like well hold on cowboy you know according to my timeline i'm actually looking sooner than i need to so i'm not going to be making an offer unless it's a really nice house i love or secondly maybe you're being too picky you're like i want the perfect house well according to your timeline and by the time you need to be out of your apartment you need to find a house like this week or next week so you can be able to put on the gas pedal or take off the gas pedal however the freaking saying goes i don't know and you can do it yourself by knowing your timeline the fourth biggest mistake home buyers make is chasing the golden egg what does this mean if you're looking for a particular kind of house in a particular kind of city usually there's multiple houses that hit the market a weekend let's say there's three or four houses that hit at the same date thursday friday and there's gonna be tons of showing on the weekend so what happens is there's usually one maybe two houses that are very very nice they're like remodeled built-in grill pool there's a ton of business cards when you see it there's a line of people waiting outside there's this huge amount of anticipation and multiple offers that people just go crazy and they over bid to get this house don't chase the golden egg don't go for the obvious most beautiful option because yes it is really nice but there's going to be a huge premium to pay especially when it's a really intense market if there's three or four of them that really look nice i mean go look at four of them sure but maybe go for the ones that aren't getting as much attention maybe there are nicer but they're just maybe a little ugly or need a little repairs and guess what because you prepared and you save some money for potential renovations you have the ability to go for the gold the ones that aren't the golden egg and have the ability to do some renovations if you need to and the fifth and final biggest mistake home buyers make is they buy with equity in mind this is going to be more crucial than ever starting 2021 2022 all these years i've talked about this before there are a lot of people out there that made a lot of money these last 10 years and how do they make it well they bought a house they maybe painted it maybe put some nice cabinets in it they held down for it for three or four years they sold it made 50 100 000 you know you don't have to be an hdtv show a beautiful man or woman to make that kind of money in the last 10 years because we've been in an intense recovering market it's not going to be like that anymore who knows what the future has in store for us i don't know if some people say it's a market crash others say it's an adjustment others say that everything's going to be fine and if you're wondering what i think i've made videos about it before so go check them out after this but the point is no one knows and your your cousin edgar who has helped a lot of people make a lot of money is going to tell you that this is a solid investment that you can sell your house in three years and make thirty thousand dollars and use that money to buy another one there's no knowing what the future has in store so you should not buy a house with the idea that you're gonna sell it two or three years from now and make a huge amount of equity sure it's an investment sure it's good to upgrade it slowly so you can you know maybe build on the potential value but this next five years guys is going to be just a crazy you know i want to say storm who knows what's going to happen to the values who knows what's going to happen so this house you're buying now should be a long-term investment none of this three or five-year bull crap if you live in a great market and you're able to do that great you can send me a nasty email and make me cry for everyone else if you're buying a house hold on to it for a while don't go be an hdtv star don't go try to do flips i mean sure it's going to be possible to do them but just just hold on to your horses by understanding these five crucial mistakes you're now in a better position to go out there and be a little more prepared in your next home purchase if you might have some potential tips for any future home buyers you can leave a comment below so that way we share the knowledge and we help the next generation of people thank you guys so much for watching appreciate your time take care

Channel: Javier Vidana

Views: 284,078

Rating: 4.9543757 out of 5

Keywords: Javier Vidana, FHA, Conventional, first time home buyer, buying a house, first time home buyer mistakes, real estate, first time home buyer tips, home buying tips, how to buy a house, buying a home, realtor, first time home buyers, how to buy a home, home buying, home buying mistakes, investing, biggest first time home buyer mistakes, first time home buyer tips and advice, first time home buyer advice, 5 biggest mistakes first time home buyers make, buying my first home

Id: 7GQF2q4zIA4

Length: 13min 25sec (805 seconds)

Published: Sun Dec 20 2020

Reddit Comments

[u/bltrvns9]

The amount that we were pre-qualified for is insane. Our house ended up costing almost half of what we qualified for and our payment is less than 25% of our net income. I think that is THE single most important thing. People will hear “$300,000” and actually start looking at houses in that range when it’s actually way out of their league. No wonder there are so many foreclosures