1. Not Knowing What You Can Afford
Make a budget; list all of 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 only occur 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.
If you end up looking at homes that are outside your price range, you'll end up lusting after something you can't afford, which can put you in the dangerous position of trying to stretch beyond your means financially or cause you to feel disappointed with what you actually can afford. You may learn that you need to work on reducing your monthly expenses and/or increase your income before you even start looking.
2. Skipping Mortgage Qualification
What you think you can afford and what the bank is willing to lend you may not match up, especially if you have poor credit or unstable income, so make sure to get pre-approved for a loan before placing an offer on a home. You could be wasting everybody's time if you sign a contract and then discover later that the bank won't lend what you need.
3. Failing to Consider Additional Expenses
Once you become a homeowner, you'll have additional expenses on top of your monthly payment. Unlike when you were a renter, you'll be responsible for paying property taxes, insuring your home against disasters and making any repairs the house needs (which will occasionally include expensive items like a new roof or a new furnace).
4. Being Too Picky
Put everything you can think of on your new home wish list, but don't be so inflexible that you end up continuing to rent for longer than you really want to. First-time homebuyers often have to compromise on something because their funds are limited; busy street, outdated decor, repairs to the home, or forgo that extra bedroom. Of course, you can always choose to hold off on your purchase - you'll just have to decide how important it is for you to become a homeowner now rather than down the road.
5. Lacking Vision
Even if you can't afford to make small changes now, it might be worth it to live with some imperfections for a while in exchange for getting into a house you can afford. If the home otherwise meets your needs in terms of the big things that are difficult to change, such as location and size, don't let physical imperfections turn you away.
6. Being Swept Away
Don't get caught up with seller upgrades.  If you're on a budget, look for homes whose full potential has yet to be realized. Also, first-time homebuyers should always look for a house they can add value to, as this ensures a bump in equity to help you up the property ladder.
7. Compromising on the Important Things
Don't get a two-bedroom home when you know you're planning to have kids and will want three bedrooms. 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 Choosing to Hire an Agent
An agent can save you time, money and help you avoid making emotional mistakes. They can provide market statistics and comparable sales to help you make informed decisions and guide you through the piles of paperwork.
10. Not Thinking About the Future
It's impossible to perfectly predict the future, but paying attention to the information that is available to you now can help you avoid unpleasant surprises down the road.
Some questions you should ask about your prospective property include:
Conclusion
Buying a first home can seem stressful and overwhelming, and it isn't without its share of potential pitfalls. If you're aware of those issues ahead of time, you can protect yourself from costly mistakes and shop with confidence. We're here to help!

 

 

Kappy and Jennifer have a combined 40 years in the Real Estate Profession.  We are committed to giving our clients the most up to date Real Estate information and Stellar Service because, We Love Our Work and So Will You!  Call us or e-mail us for information about the Tahoe Truckee Real Estate Market.  By the way, if you think any of this information might be of interest to anyone you know, feel free to forward this newsletter.  We would really appreciate it!