10 Worst First-Time Home Buyer Mistakes

Amy Fontinelle at Investopedia.com wrote a great article that highlights some of the biggest and "most costly mistakes that could put a hold on that sold sign." Here, I'll list the ten mistakes she gives and note my thoughts on them.

1. Not Knowing What You Can Afford
You should already know your budget well enough to know what you can afford, regardless of what a mortgage company tells you. While they are looking at your income and expenses, you know about your daily coffee runs (those can get expensive!) or your shoe habit. Not being firm about a price range is a recipe for house hunting heartbreak.


2. Skipping Mortgage Qualification
This is an important step that a lot of people miss! Although technically you can wait to get mortgage approval until after you place an offer, why would you? That is not the time you want any surprises. Find out up front how much your lender is willing to give you, and go from there. That way, you aren't wasting your time (not to mention your agent and the seller's time).


3. Failing to Consider Additional Expenses
There is more to owning a house than just paying the mortgage. You need to consider property taxes, maintenance expenses, possibly HOA (home owners association) fees, insurance... Don't jump at a house without taking these things into consideration.


4. Being Too Picky
I admit, as a first time home buyer myself, this is a difficult thing for me. I've seen so much that I like that it's hard to settle for less! However, you have to realize that most of the time you will have to compromise. Make a list of the things you absolutely must have (for me, I must have a 2/2) and the things you'd like to have but could live without (I love having natural light in the bathroom, but I don't necessarily need it). You may be surprised how many homes you find that fit your criteria once you identify the needs vs.  wants.


5. Lacking Vision
Some things are not worth losing a home over. Some people would walk away from what could be a perfect home because the yard is not in shape, or because they hate the wallpaper. Don't let little things deter you! Cosmetic issues can always be corrected, even if you can't do a complete renovation on move in day.


6. Being Swept Away
Again, I'm guilty. I am a huge fan of granite counter tops and stainless steel appliances. However, I have to stop and ask myself whether those upgrades are worth the additional money. For example, I looked at two condos in the same neighborhood with the same layout. One had the upgrades that I wanted and I immediately fell in love. You know what I wasn't in love with? The fact that it was almost $20,000 more than the other condo. This goes back to #5. All it would take to bring the plain-Jane condo up is a little vision and a little money--which could certainly be less than $20,000.


7. Compromising on the Important Things
You know those needs that you listed in #4? They are needs for a reason! If you know you want a certain location to be in a good school district for your kids or need a yard so that your dog can run around, then make those a priority and stick with it. You can compromise on little things, but don't make a decision you will regret later simply because it's cheaper or you feel like you must make a move right now.


8. Neglecting to Inspect
It always surprises me when buyers decline to get a home inspection. When it comes to houses, everything is not always as it seems. You need to be sure that there are no major issues with the wiring, plumbing, gas main, structure, etc. The fee you pay for an inspection could be hundreds (or thousands) less than what you would have to shell out for repairs and it gives you a chance to avoid potential disaster.


9. Not Choosing to Hire an Agent or Using the Seller's Agent
The seller's agent is under a fiduciary responsibility to the seller. That means that they are obligated to work in the seller's best interest. Although agents are responsible for treating both parties fairly (and working in both parties' best interest once they become a dual agent) a buyer's best bet is to have an agent that is working strictly for them. This makes negotiations easier (as the agent isn't conflicted) and allows a buyer to have an agent guiding them during their home search.


10. Not Thinking About the Future
I completely agree with the author's suggested questions to ask yourself about your potential new neighborhood:

• What kind of development plans are in the works for your neighborhood in the future?


• Is your street likely to become a major street or a popular rush-hour shortcut?


• Will a highway be built in your backyard in five years?


• What are the zoning laws in your area?


• If there is a lot of undeveloped land? What is likely to get built there?


• Have home values in the neighborhood been declining?