10 mistakes first-time buyers commonly
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
If you can't time your closing correctly, approach your landlord about a short
lease, say three or six months in length. One alternative is a month-to-month lease. Or,
you can ask your landlord to include an escape clause in your new lease.
- 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.
The problem with looking at homes you can't afford is that you probably will be
disappointed when you see what's in your price range. 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 1-bedroom condominium. What they don't
realize is how likely it is they will meet someone, fall madly in love. Unless the girl
(or guy) next door has a condo you can combine with yours, that 1-bedroom, 1-bath will
suddenly seem too small.
For the same price, and possibly even the same location, your dollars might buy a
2-bedroom, 2-bath apartment, 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
- 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
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
- 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
broker. 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
- 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.
Special thanks to Ilyce R. Glink (REAL
ESTATE MATTERS SYNDICATE)