Buying your first home can be an exciting experience -- but it can also be complex, confusing and time-consuming. Here are some common traps first-time home buyers fall into that you should avoid:
You're Not Sure How Much You Can Really Afford
"How much can I borrow?" is not the same as "How much should I borrow?" The mortgage that you qualify for isn't necessarily the amount you can actually afford. Bear in mind that homeownership brings extra expenses such as utilities, homeowners insurance, property taxes and maintenance and repair costs. Factor those into your monthly budget to find out how much home you can comfortably afford without becoming "house poor."
Overlooking Extra Costs
Your mortgage isn't the only cost to consider when purchasing a home. You'll also have to be ready at the outset to cover closing costs -- potentially including loan origination fees, appraisal and home inspection costs -- as well as moving costs and any necessary repairs you'll need to make when you take possession of the home.
Make sure you have a budget that can cover several thousand dollars of extra expenses related to home buying.
Not Getting Pre-Approved for a Mortgage
Before you even start looking at houses, you should get pre-approved for a mortgage. This carries two benefits: First, you'll know the price range for a home you can realistically purchase, and second, many realtors won't even let you put a bid on a house until you've completed this step.
Getting Too Emotional
It's easy to fall in love with a home at first sight, but don't let that initial emotional reaction cloud your judgment. Look beyond the aspects you adore and ask yourself if the entire house is the right fit for you -- is it large enough, is the layout workable, is it in the right neighborhood, will you have to make any costly renovations?
Not Getting a Home Inspection
Without a home inspection, you could be purchasing a money trap without even knowing it. Home inspections shine a light on potentially pricey (and dangerous) issues with a home and can save you from getting in way over your head.