10 First-Time-Homebuyer Mistakes

A house is probably the biggest purchase you'll ever make. And, if you can avoid these missteps, chances are you'll be happy with the home you choose.

By Investopedia

Are you gearing up to buy your first place? Shopping for a home is exciting, exhausting and a little scary. In the end, your aim is to end up with a home you love at a price you can afford. Sounds simple enough, right? Unfortunately, many people make mistakes that prevent them from achieving that simple dream. Arm yourself with these tips to get the most out of your purchase and avoid making 10 of the most costly mistakes that could put a hold on that sold sign.

1. Not knowing what you can afford.
Have budget - make a list of all your monthly expenses, including vehicle costs, student loan payments, credit card payments, groceries, health insurance, retirement savings etc + annual major expense like car insurance and road tax.

Know how much you can spend on your new home each month.

2. Skipping mortgage qualification.
Make sure to get preapproved for a loan before placing an offer on a home.
If you cause the deal to fall through, you may have to forfeit the money that you put up when you went under contract.

3. Failing to consider additional expenses.
Once you're a homeowner, you'll have additional expenses on top of your monthly payment. Responsibilities - paying property taxes, insuring home, making repairs etc.

4. Being too picky.
Don't be so inflexible that you end up continuing to rent for significantly longer than you really want to. First-time homebuyers often have to compromise on something because their funds are limited. You may have to live on a busy street, accept outdated decor, make some repairs to the home or forgo that extra bedroom.

5. Lacking vision.
It might be worth it to live with the ugliness for a while in exchange for getting into a house you can afford.
Doing home upgrades yourself, even if you have to hire a contractor, is often cheaper than paying the increased home value to a seller who has already done the work for you.

6. Being swept away.

Minor upgrades and cosmetic fixes are inexpensive tricks that play on your emotions and elicit a much higher price.
If you're on a budget, look for homes whose full potential has yet to be realized. Look for a house you can add value to, as this ensures a bump in equity to help you up the property ladder.

7. Compromising on the important things.
It's true that you'll probably have to make some compromises to be able to afford your first home, but don't make a compromise that will be a major strain.

8. Neglecting to inspect.
Before you close on the sale, you need to know what kind of shape the house is in. You don't want to get stuck with a money pit or with the headache of performing a lot of unexpected repairs. Keeping your feelings in check until you have a full picture of the house's physical condition and the soundness of your potential investment will help you avoid making a serious financial mistake.

9. Not hiring your own agent or using the seller's agent.
Once you're seriously shopping for a home, don't walk into an open house without having an agent (or at least being prepared to throw out a name of someone you're supposedly working with).

10. Not thinking about the future.
It's impossible to perfectly predict the future of your chosen neighborhood, but paying attention to the information that is available to you now can help you avoid unpleasant surprises down the road.

Some questions about your prospective property:
development plans? major street? popular rush-hour shortcut? highway? zoning laws? undeveloped land? What is likely to get built there?
home values in the neighborhood?

This article was reported by Amy Fontinelle for Investopedia.