When buying your first home you can avoid some common pitfalls by knowing about the ten common mistakes first-time buyers make during the process of purchasing a home.
Although you might not see yourself doing everything on the list, brokers agree that the average first-time buyer does at least one of the following:
Most first-time buyers are renters, but many decide to buy a home just after signing a lease for another year. Don't sign a long-term lease if you expect to buy a home before that lease period expires, otherwise you'll end up writing rent and mortgage checks.
Looking at homes you can't afford
First-time buyers often hear that they can buy a home up to 2 1/2 times their combined income. That might be true, but you also have to factor in your debts, down payment and the interest rate. In order to save the heartache, get pre-qualified through your local lending institution. There's no cost or obligation, and the lender will tell you exactly how much house you can afford to buy.
Buying the wrong size home
First-time buyers often purchase 2-bedroom condominiums. For the same price, and possibly even the same location, your dollars might buy a 3-bedroom, 2-bath home, which would give you additional flexibility.
Buying in a neighborhood you know nothing about
Sometimes first-time buyers fall in love with a house in a neighborhood that is inappropriate for them. Even though you'll live in the house, you'll have to travel through the neighborhood to get there. To avoid making this mistake, spend some time in the neighborhood before you buy. Drive to and from the house. Sit in your car and watch your future neighbors come home from work. Listen to how loudly their children play their favorite music. Walk to the local bar, restaurant, grocery store and cleaners. Think about whether or not this neighborhood will make you as happy as the house.
First house is best theory
Coming from a cramped rental, almost any home will look good. Avoid jumping at the first home you see. Look at 10, 20 or even 30 homes until you feel you know what's on the market. Season your eyes by inspecting different types of homes, including condos, town houses, duplexes and single family houses.
When you've finally narrowed your choices to three or four, revisit them again. Then make your decision. Although some completely impulsive decisions work out, most do not.
Buying a property that is difficult to resell
Although you don't mind that the house backs up to the local railroad, it's unlikely you'll be able to easily convince another buyer just how quiet and peaceful it is.
When buying a home, try not to buy one that will be difficult to resell because even though you think you'll be there forever, you won't. Most first-time buyers sell within five to seven years. Think hard about how you would sell the house before you buy it.
Overextending your budget
Although you might technically be able to afford a $100,000 home, it might stretch you beyond your comfort zone. To avoid feeling pinched, write down everything you spend (down to that last piece of bubble gum) for two months.
Can you live without buying the latest CD? Would you feel uncomfortable knowing you can only go out to dinner once a month? That you must eliminate your early vacation?
Better to buy something less expensive that will give you greater peace of mind and allow for a few extras.
No one's saying you shouldn't take your time when finding the right house, but many first-time buyers are afraid of making commitment. That fear is easily conquered, once you've lost two or three homes you really liked. Or, talk out your fears with your realtor. Remember, others have tread this way before.
Choosing the wrong mortgage
Many first-time buyers have heard from their parents that the only mortgage to get is a 30-year fixed. That's because most parents didn't have the tailor-made financial choices buyers have today.
The type of mortgage you choose will depend on several factors including how long you plan to live in your home. Your lender should help you choose the best loan for your particular circumstances.
Under-insuring the property
First-time buyers know they have to buy home insurance to cover their mortgage. Sometimes they forget to insure the contents of the house.
Think about how much it would cost you to replace your furniture, clothing, books, CD's, artwork and pots and pans. Add up everything and then tack on the cost of actually rebuilding the home should it burn to the ground. If you want it all replaced, that's how much insurance you should buy.
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