Monday, June 18, 2012

5 First Time Home Buyer Mistakes

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Buying your first home can be a great time if you are prepared. Finding the right home in the right place at the right price is sometimes an impossible task. On one of these points you may have to give in on. But the first time home buyer needs to look at more than these three criteria. There are many things to consider, that if not planned out well will turn a happy time into a disaster.

1. How much house can you afford. The biggest mistake many first time home buyers make is not knowing how much house they can afford. Knowing the true amount of house you can afford is not easy. Your mortgage company tells you one figure, the builder tells you another, and Uncle George tells you another. 

An easy way to get a quick and dirty figure is take your monthly expenses (excluding rent), including vehicle costs, student loan payments, credit card payments, groceries, health insurance, retirement savings and so on. Don’t forget major expenses that occur only once a year, like any insurance premiums you pay annually or annual vacations. Subtract this total from your take-home pay and you’ll know how much you can spend on your new home each month.

2. Getting pre-qualified for a mortgage. A first time buyer mortgage qualification consists of going to your lender and making an application to see if your credit and income are good enough to have a mortgage. No sense in wasting everyones time if you do not have the credit or income for a mortgage.

3. Consider additional home expenses. As a renter you had none of the expenses your going to have as a home owner. You have to add to your budget items like property taxes, insurance, roof repairs, furnace repairs, and a slew of other expenses seen and unseen. Some communities have homeowner associations with monthly maintenance costs.

4. Not having the home inspected before purchase. You need to know the true condition of the home before purchase. Suprises like a broken furnace, leaky roof, or termite damage is going to cost plenty to repair. These types of problems should be caught before purchasing a home. You may get a discount on the purchase price because of these defects. Having a good home inspection will give you the knowledge of the condition of your future home and definitely save you money.

5. Hire your own agent. This is the same as going to court and using your opponents lawyer. Having your own agent on your side helping you pay the lowest amount for the house will offset any fees you will have to pay. Agents are held to an ethical rule of acting in the best interest of their clients.

Buying your first home can be stressful and exhausting. Being aware of its pitfalls is half the battle. If you are aware of them ahead of time you are able to protect yourself and you won't make dumb mistakes.

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