5 foolish mistakes first-time home buyers make

Posted on 02/06/2015

Buying your first home is a exciting time but do not let the excitement get the best of you. Below are some tips for buying your first home.

Overspending:  Before looking at properties, know how much money you can afford. There are tools online that can help you but they are only estimates. Be sure to adjust the figure for your individual situation. Your current monthly rent payment can help indicate how much you can afford. Meet with a lender and get pre-approved. 

Counting chickens before they hatch:  When determining how much you can afford , base it on the figure you are earning today.  Do not assume you will be earning more money down the road.  No one can predict the future. 

Failing to account for the extra cost:  When renting , you often have one payment , rent and maybe renter's insurance. When you own a home, the mortgage payment is just one of many payments. For example you have HOA's fees , homeowners insurance and property taxes. 

Failing to protect yourself:  During your search, you may find a home that looks great at first glance. Than as walking thru, you notice a few problems with the house. A home inspection provide you with some protection and can find problems that you can't. A seller may not tell you that there is mold in the basement but the inspector will. Another way to protect yourself is with a contingency clause. " A mortgage financing contingency clause protects you if you lose your job and the loan falls through or the appraisal price comes in over the purchase price". If one of those events occur, the buyer gets their money back used to secure the property. Without the clause the buyer can lose the money and be obligated to buy the house.

Being too paranoid or naive:  Paranoid buyers sometimes believe that the price is not an accurate assessment of the house's market value.  They may submit a low- ball offer and get frustated when they are consistently rejected. Often paranoid buyers do not trust real estate agents so choose to work without one. 

Sometimes first time home buyers are naive.  They are excited and think nothing can go wrong. If a home has problems, they view them as easy fixes.  Often naive buyers and unrealistic about the cost of a home and the cost to fix a home up.  A naive buyer may move to the wrong side of town. It is important to remember you can fix up a home but you cannot change a neighborhood. 

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