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5 First Home Buyer Pitfalls to Avoid

A Guest Post for the potential new home buyer –

There are very few things more exciting (and exhausting!) than picking your first home. However, sometimes your enthusiasm and desire to get the best house money can buy can lead to some serious financial pitfalls. While you shouldn’t compromise on qualities that are important to you like how many bedrooms the home has, you should be flexible in other ways.

Before you head out to look for your dream house, consider these points to avoid the most common first time home buyers’ mistakes:

1. Not knowing what you can afford. The bank will qualify you for a home loan, but don’t trust what they tell you that you can afford. Often, they will qualify customers for more than they can comfortably afford. If you’re in the market for a new home, start setting aside the money for a mortgage payment now. For instance, if your rent is $1,200 a month, and you’ve been qualified for $2,200 a month mortgage payments, start putting aside the $1,000 difference each month. Do this for several months to make sure you can comfortably afford what the bank suggests. You might be wise to purchase less home than the bank says you can afford.

2. Failing to consider additional expenses. Too many buyers look at the cost of their mortgage payment as their only expense when buying a home. However, there are other expenses to consider–property tax, repairs and maintenance, private mortgage insurance and home owner’s insurance–to name a few, that can add several hundred dollars a month on top of your mortgage payment. Failing to plan for these expenses, especially repairs and maintenance, can you leave you short on cash or even worse, unable to afford your home.

3. Being too picky. First time home buyers are notoriously picky. If you’re on a limited budget, recognize that you may not be able to buy your perfect dream home. You may need to compromise to meet in the middle between the house you desire and the one that is available to you. Especially, don’t reject a house just because of cosmetics. Adding fresh paint and your own decorating touches can make a house much more attractive.

4. Compromising on the important things. As a first time home buyer, you shouldn’t let cosmetics discourage you from buying a home. However, you should remain firm on the structural elements of a home. If you have two children and want a three bedroom home, don’t settle for a two bedroom home or you’ll likely be unhappy and ready to move quickly. Likewise, if you want to buy a house that is close to your work so you only have a 15 minute commute, don’t choose a home that is one hour away from your workplace.

5. Don’t go through the process alone. Securing a mortgage and buying a home can be overwhelming and time consuming. Find professionals like real estate agents and mortgage brokers who can help you through the process. Mortgage brokers have a great deal of knowledge, and they can do much of the time consuming work for you. Best of all, most offer their services for free to the home buyer. Why navigate through the home buying process alone when there are brokers who can guide you through the process?

Buying a home is both exciting and overwhelming. Take note of these 5 mistakes first time home buyers make. Avoid them, and you’ll likely be happy with your new home for years to come, saving you the turmoil and expense of having to move quickly because you’re not satisfied with the home you purchased.

  • Honolulu Aunty May 29, 2013, 11:34 pm

    Good points! However, if I may add a Robert Kiyosaki type of recommendation that ties in with point #3 – being too picky:

    Buy a duplex so that you can live in one part, and get rental income coming in for the other part. By doing so, you are minimizing your mortgage payment – your tenants are helping you pay for your house!

    Most people do buy their home, pushing it to the most that they can afford, which results in paying for a mortgage with nothing in return except a deed in their name. Their home becomes a big black hole that they must keep shoveling money into, for 15+ years, especially if they buy something that they intend to live in for the rest of their lives.

    Better to settle for an okay temporary abode that partially cash flows, and invest and work toward buying their dream house with investments that will help pay for their living expenses. Sacrifice today in order to acquire tomorrow.

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