Avoid the 4 Worst Real Estate Decisions New Buyers Make

Real estate buyers spend years honing their crafts and finding the best deals they can. People who are new to the real estate buying business would do well to talk to experienced real estate investors. This will help them work to avoid the biggest mistakes that new buyers often make that can cost a lot of money.

Utilizing the CHIP Program

CHIP Money

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The CHIP program is a mortgage given to new buyers who are trying to help improve neighborhoods that have been in decline. CHIP stands for Community Home Improvement Program, and lender BB&T is famous for offering this loan. The program requires no money down and does not ask the borrower to pay mortgage insurance, which takes a huge financial load off the borrower. But if the real estate appraiser determines that the home is in a neighborhood where property values are declining, then the borrower may have to fork over a three percent down payment. Always have the home you are considering evaluated before you start the CHIP process.

Flipping Too Fast

Flipping Houses

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One of the newest trends in real estate development is flipping houses. This was made popular by cable television shows that make the process look much easier than it really is. New real estate buyers often try to flip a house too fast and run into a series of issues. When you try to flip a house too fast, you tend to cut corners on the remodeling work and you may wind up ignoring the work needed to bring the house up to local building codes. After rushing through a shoddy remodeling job, you will wind up paying more to have the home fixed up to the point where it can actually sell. You may also have to deal with costly repairs that the local government deems necessary before the home can be legally sold.

Not Doing Your Research

Old Neighborhood

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Real estate investors can make money flipping homes, but only if the area the home is in is a seller’s market. Too many new real estate buyers try to save money by purchasing cheap homes in declining neighborhoods. After investing in the remodeling of the property, you would be at the mercy of the offers you receive. Instead of being able to dictate your profit, the buyer’s market your home is in could wind up handing you a huge financial loss.

Low Down Payments

Real Estate Down Payment

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New real estate buyers often do not understand the value of large down payments. When you put down more than 10 percent on your new home, the mortgage company will not force you to pay mortgage insurance, which adds to your monthly payments. A larger down payment means you will have to finance less of your home’s value and pay less in interest.

When you are ready to start buying real estate, take some good advice and try to avoid the four biggest mistakes that many new buyers make. It can mean the difference between making a lot of money or standing at the brink of financial ruin.

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