Purchasing a house for the first time can be a special experience in a person’s life. But if you aren’t prepared, what could’ve been a great ride, can quickly turn into a home-buying nightmare.
Here are nine pitfalls I recommend you keep in mind as you look to purchase your first dream home:
- Being overly enthusiastic. Manage your emotions. Don’t jump for joy at the sight of a new house in the presence of the seller (or the seller’s agent) and then expect him to budge on the asking price. Save your high-fives for your agent. When dealing with the seller, keep your poker face on.Failing to consider the resale value. Keep in mind that you will probably not live in your home forever, so it makes sense to think ahead and invest in property that will be attractive enough to future buyers (hint: extreme proximity to a future industrial park or highway is not always a winner).
- Failing to consider the resale value. Keep in mind that you will probably not live in your home forever, so it makes sense to think ahead and invest in property that will be attractive enough to future buyers (hint: extreme proximity to a future industrial park or highway is not always a winner).
- Living outside of your financial comfort zone. Don’t get caught up living outside of your financial means. Your mortgage payment should equate to about one week’s salary, not more. By choosing a house that is affordable, you can actually enjoy being there more!
- Not having an emergency fund. Be prepared for unexpected expenses by putting money into a contingency account. You no longer have a landlord to call for help when things break and nobody wants to be stuck with a broken HVAC in the middle of summer!
- Shopping for a home before speaking with the bank. Don’t lose time looking at houses worth $350,000 if the bank will only agree to finance a $250,000 home. Sit down with a lender FIRST to determine your buying power.
- Forgetting to save for furnishings and other necessities. In addition to your downpayment, plan to save enough for some home essentials. For instance, most new homebuyers will have to buy a washer and dryer, lawn mower and ladder after closing on a new home, just to name a few items.
- Buying a big item prior to closing. I have seen this mistake more times than I care to remember. Don’t purchase thousands of dollars worth of furniture on credit between the pre-approval of the mortgage loan and the close on the house. Banks approve you for your mortgage based upon your credit score and savings at the time of approval. Your approval is contingent upon both things remaining the same through closing.
- Buying too young. It’s far better wait until you are stable in life before making the huge commitment of buying a house that you are going to live in. With some very young adults, there are still major life events involving career, family and personal life choices that can potentially impact home ownership. Evaluate your stage in life and determine if you should wait a bit longer before taking the home ownership plunge.
- Buying a house with a boyfriend or girlfriend. You may think that the relationship you have today with a boyfriend or girlfriend will last forever but entering into a serious contract involving a mortgage can backfire if you aren’t careful. My advice? As opposed to purchasing together, have the one with the best credit and income make the purchase. If the relationship progresses and you get married, great. If it doesn’t and you split up, then you aren’t left arguing over who gets to keep the house.
Even though there can be a few pitfalls with home buying, as long as you keep in mind the points I listed above — and keep your emotions in check — you are going to do just fine.
This was the tenth article based on my book Keep Calm…It’s just Real Estate. Stay tuned for more great tips from the eCommission team and myself!
Do you have a few words of caution you’d like to add to my list? If so, give eCommission a shout on Facebook or on Twitter.