The prospect of buying a new home can be at the same time exciting and daunting! The home buying process should actually begin long before the day you head out for your first open house, though. Purchasing a home is probably the most expensive decision you’ll ever make, so it’s important to plan, research, investigate and plan some more.
The #1 Mistake First Time Home Buyers Make
The number one mistake first time home buyers make is that they have no idea how much house they can afford. Before ever deciding to buy a house, all monthly expenses (excluding rent) should be tracked for 3-4 months. Expenses tracked should include coffee purchased on the way to work, lunches and dinners out, movies and other entertainment, and even pizza delivered.
After all expenses are averaged for the period, subtract that amount from net salary. Whatever is left gives a ballpark figure of the monthly house payment (including mortgage, homeowner’s insurance and real estate taxes) you can comfortably make. Now you’re ready to be pre-qualified by a lender.
The #2 Mistake First Time Home Buyers Make
The number two mistake first time home buyers make is that they don’t interview multiple lenders. All too often first time home buyers end up using a realtor-selected lender. While there is nothing inherently wrong with that, borrowers are usually better served by shopping around for the lender who offers the most options, and can look after their interest, rather than “making it work” so they can buy the home the Realtor wants to sell them.
The #3 Mistake First Time Home Buyers Make
The number three mistake first time home buyers make is that they call a realtor to show them homes before they ever do any research on their own. First time home buyers can do a lot of research on their own by visiting open houses and touring new home communities as well as reading the newspaper and real estate magazines to find out housing prices in the areas they are interested in.
By the time they are ready to call a Realtor, they already have a general idea of the neighborhoods they want to buy in, the features they desire and the home price range they can comfortably afford.
The #4 Mistake First Time Home Buyers Make
The number four mistake first time home buyers make is that when they buy a new construction home, they agree to upgrades and added features that the builder will furnish. This is a very expensive way to buy a dining room chandelier or upgraded light fixtures, landscaping or more expensive carpeting. These items not only increase the monthly payment the home buyer will make, there is 30 years of interest added to the cost of house fixtures and features! Much of the work and additional features can be purchased at local home improvement stores and done by the homeowner. For that matter, the home buyer would be far better served to have an independent contractor do the work for them after they move in.
The #5 Mistake First Time Home Buyers Make
The number five mistake first time home buyers make is that they purchase the most expensive home they can possibly afford. First time home buyers so often look for the biggest, most expensive home they can afford a mortgage for. The problem with this home buying method is that little or no disposable income is left to purchase furniture and accessories for the house. A great big house is nice, but it will look pretty silly with no furniture or curtains.
The number six mistake first time home buyers make is that after they have maxed themselves out on a house payment, they charge up credit cards to buy furniture and other items for their home.
