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Common Mistakes
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:
Timing problems
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.
Being indecisive
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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