You’ve decided to take the plunge and officially become a homeowner – while this is an exciting decision, it’s also a business venture. Take a look at these common mistakes of first-time home buyers and make sure you’re prepared for the adventure ahead!
The number one mistake first-time home buyers make is that they have no idea how much house they can afford. Before buying you’ll want to track all your monthly expenses (rent included) for about 3 to 4 months. ALL expenses: your morning coffee run, late-night pizza delivery, entertainment – everything! After all expenses are averaged, subtract that amount from your net salary. Whatever’s left gives a ballpark figure of the monthly house payment you can comfortably make.
The number two mistake first-time buyers make is that they don't interview multiple lenders. Many first-time home buyers end up using a realtor-selected lender, and while there’s not anything exactly wrong with that, you’ll be better served by shopping around for the lender who offers the most options.
Not doing any research on your 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 you’re interested in. By the time you call a realtor, you’ll already have a general idea of the neighborhoods you want to buy in.
Upgrading on new construction homes. When buying a home under construction, take stock of the features you need and those you just want. Pre-purchasing upgrades is an expensive way to buy a dining room chandelier or upgraded light fixtures, landscaping or more expensive carpeting. Much of the work and additional features can be purchased at local home improvement stores and can be done yourself.
Purchasing the most expensive home you 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.