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Top Three Mistakes of First Time Home Buyers

By on Dec 10, 2012 in Mortgage, Real Estate | 14 comments

Top Mistakes of First Time Home BuyersWhen you dream of the good life, living in a house that you own is probably one of those things you think about often. If this is true, then you are not alone, and owning a house is commonly included in the list of future goals for most individuals. If you are purchasing a house for the first time, there are some important things that you should avoid. First time home buyers often make the same mistakes and knowing the most common ones will help you to avoid them.

1. Impulse Buying

Impulse buys are a big no-no when it comes to purchasing a home. You are dealing with hundreds of thousands of your hard-earned dollars so thinking twice, thrice, or even more is definitely the way to go. Do not be wooed with wonderful sales pitches and do not decide immediately just because a house looks nice and has everything that you want. Even if the house is affordable, there are tons of things to consider like the neighborhood, the distance to your work, the sturdiness of the foundation, and more. You have to survey many homes to find the perfect one for you.

2. Not Getting Professional Help

It is not smart to close the deal by yourself or to go through this process without the help of professionals who are experts. Among the professionals you need are:

A Realtor

Getting your own real estate broker in addition to the seller’s agent is advisable. Your own realtor can provide a more truthful assessment of the property. The seller’s agent will prioritize in closing the deal while getting your own realtor will give you a more reliable opinion.

A Loan Officer or Mortgage Broker

A loan officer or mortgage broker can help you choose the best type of loan for your particular need. When it comes to buying a home, there are tons of different loan types that you can choose. Choosing on your own, without help from the experts, increases the chances of getting a loan that is unsuitable for your particular situation and may be hard for you to handle in the long run.

A Home Inspector

Many first time buyers are so overwhelmed with the beauty of a particular property that they tend to forget that some problems cannot be seen by the naked eye. Home inspectors are there to help you see some problems that may render a house unworthy of your investment. Termites, structural problems, and faulty electrical wiring are just some things that can be hidden at first glance and may need a trained eye to pinpoint.

3. Not Considering Additional Costs

When you are buying a new house, you have to remember that you will have to pay for the mortgage, taxes and home maintenance for years to come. You have to consider more than the upfront cost of the house. You also need to consider additional and future expenses. Even if you can afford a big house, can your future income cover the house maintenance as well? Real estate taxes vary from place to place, and they can pose as a big financial burden.

It is understandable to get excited when purchasing your dream house, but you should remember that it does not come cheap. You worked hard for years to get to this point where you can actually afford to own the place you (and your family) will live.

Be wise and shop around. Be keen in observing a house’s flaws as well as its advantages. Let the purchase of your first home remain the fulfilment of your dream and not turn into something you regret because you made the same mistakes as other first time buyers have.

Are you a first time home-buyer? How will you avoid these common pitfalls?

Dominique Brown is the author of yourfinancessimplified and insiderrealestatetips.

Image Credit: Let Ideas Compete

    14 Comments

  1. Over the years I’ve owned 2 brand new houses and a brand new townhouse. Each for 4 to 5 years. which cost me the least amount of money in the time I lived there? The townhouse, of course.

    You are right. The amount of money we spent on the actual houses during the time we lived there was incredible. The cost to build a fence, lay sod, plant trees, and so on, was extremely high.

    Sicorra@TacklingOurDebt

    December 10, 2012

    • We too have had some unexpected expenses that we never factored in. We live in an HOA community, so we had to pay two different large assesments. One to replace the roof and another to resurface the parking area. There is a lot to investigate before buying a home, especially when buying one within an HOA community.

      Deacon

      December 10, 2012

  2. This probably goes into number 2, but the biggest problem is that they simply make uneducated decisions. They don’t think about the future, about resale value, etc.

    Jason @ WorkSaveLive

    December 10, 2012

    • This was my major mistake when I purchased my first rental. I thought it was in a great community and that people would rent it out at a price that would cover the mortgage. Man was I wrong on that one. It does pay to make educated decisions. I think the burn from that experience is a major reason why I love teaching others about personal finance.

      Deacon

      December 10, 2012

  3. Good post! Thankfully we had a really good realtor and mortgage person who were insistent that we be prepared financially for this. I think a big thing to look at is #3, there are SO many costs involved when you buy a house that many overlook. Take window treatments for example. Unless you want to parade in front of your neighbors, then you need something covering your windows. Those alone can cost hundreds, if not thousands of dollars.

    John S @ Frugal Rules

    December 10, 2012

    • One thing that I have found too, is that it generally isn’t only the window treatments. I put up curtains and then I need to get pillows that match the curtains. Then I have to get a rug that has the same color as the curtains in it to accent the room. Then I need a doormat that does the same thing. The list can go on and on. Not to say that I cant just purchase window treatments, but once I start a project it tends to lead to other purchases that I didn’t anticipate up front.

      Deacon

      December 10, 2012

  4. LOL. We made all three of those mistakes when we bought our (first and only) house. We’ve stayed long enough and weathered the storm long enough that we’ll come out OK when we do go to sell it, but those are things we’ll not do again.

    Shane @ Beating Broke

    December 10, 2012

  5. This is all really good advice. I did the opposite of every single point you made when I was buying our current home. It worked out OK in the end, but it would have been smart to follow your advice.

    I recently did a 4 part series on my blog about buying land and building a house, feel free to check it out – I start off by making an dumb impulse land purchase, stupid marketers sucking me in!

    Glen @ Monster Piggy Bank

    December 11, 2012

  6. Good list Deacon! I think that we have made all of these mistakes at one point or another. However, we have become pretty seasoned buyers now.

    Holly@ClubThrifty

    December 11, 2012

  7. Good post. It’s important to consider all the hidden costs associated with purchasing a home. With that said, it’s also a good idea to make sure you keep the loan and appraisal contingencies on the contract as well. In a hot market, sometimes buyers get too emotional and listen to whatever their agent tells them to do. Though it might help you to win, it’s not worth the risk to go into contract without a means to get out of a bad deal. An appraisal contingency can help protect you from overpaying.

    FI Fighter

    December 11, 2012

  8. Buying a house is a scary thing. It definitely helps to have a friend in the real estate business. Getting a real estate license can help a bit, too.

    Caesar F

    December 12, 2012

  9. The additional costs are what can weigh heavy on the pocket book as many tend to forget about these. Pair that with ongoing maintenance and you have a house that is ready for disaster. Spending less than the bank gives and making sure you do a couple of budgets BEFORE you buy one for everyday and one for an emergency situation ie:loss of job,health will go a LONG WAY. Great Post

    Canadianbudgetbinder

    December 13, 2012

    • I like what you said about planning for emergency situations. It is always good to plan for the unknown, because emergencies DO happen and it is important to have a game plan for them!

      Deacon

      December 14, 2012

  10. Number 3 is why Renting is half the cost of buying … Insurance, Taxes, Maintenance and up keep, remodel, flowers yard work, and so much more when you rent you have a 4 + person team to do all the work for you 6 days a week for pennies.

    Bill

    January 5, 2013

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