3 Simple Mistakes First Time Home Buyers Always Make
08/25/2010 If you're a first time home buyer, or you're about to become one, congratulations and good luck in your search for that perfect home. But be careful. Avoid the three pitfalls listed here. They're easy to miss, and you might be surprised at some of them.
1. Don't buy the home you really want. Why not? Simple. You probably can't afford it. Without previous home equity to leverage, you likely have just cash reserves and maybe a retirement fund. This means you'll be paying for most of the home price with your mortgage. If you have any imagination at all, the house you dream of owning is probably outside your budget, which means you'll have to take on a heavier mortgage to purchase it. Many first time home buyers default on their mortgages and face foreclosure after a short time for this very reason. Don't buy your dream home yet. Not unless you're positive you can afford it.
2. Don't do what everyone tells you to do. This one is tricky. If you're a first time home buyer, chances are you don't know everything about the real estate industry. That's okay. But everyone in your life, especially friends, relatives, and neighbors who work in real estate, will have an opinion on what house you should buy, or where and when your should buy it. Don't take advice unless it comes from a source that is trustworthy, reputable, and unbiased. Your local real estate agent may or may not tell you what you need to know. The same goes for mortgage brokers and lenders.
3. Don't forget about the mortgage. This happens all the time. First time home buyers are naturally most interested in finding a house to live in. They'll spend months or even years talking to professionals and doing personal research, trying to find the house that's best for their needs. This is good. But these same buyers will then go with the first mortgage deal they get approved for, almost as an afterthought. This is not good at all. When you're a first time home buyer, more than ever, the mortgage is at least as important as the house itself. Don't forget to compare mortgage rates, lenders, and loan terms. Research. Find the best mortgage you can. It's important.
If you can avoid these three simple mistakes, you'll have handled your first home purchase right.
