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Avoiding the Most Common Home Buying Mistakes

You may have found yourself considering the purchase of a new home lately, especially considering all of the reports that have been in the news regarding how many great bargains are available in the existing market. If that is the case, you should know that there are actually numerous bargains to be had, but you must tread carefully in order to avoid making mistakes which could actually cause your bargain to turn out to be a nightmare.

Perhaps one of the biggest mistakes that a home buyer can make is to not become pre-approved for a mortgage before they begin shopping for a home. When you do not make the lender your first stop what frequently happens is that you will fall in love with a home and then decide that you must have it, even if you are not sure yet whether you can actually afford it or not. Keep in mind that pre-approval and pre-qualification are not the same things. A pre-qualification is a non-binding estimate that is based only on estimates of your income with nothing actually verified and usually no credit record checked. A pre-approval is an actual loan commitment. When you obtain a pre-approval, you actually sit down with the lender and provide all of the official documentation to become approved for the mortgage loan. Not only does becoming pre-approved give you a better idea of what you can afford so that you can avoid falling in love with a house that you really can't afford, but it also gives you a stronger negotiating position as well when you are ready to place a bid on a house.

Additionally, many home buyers attempt to purchase a home without working with a real estate agent. This can be a huge mistake. The process of buying a home can be very complicated, especially today. When you work with an agent you will have someone on your side who can explain the process, analyze the local market and guide you through the process (Read more on why you need to find a realtor before buying a house).

Additionally, you need to make sure that you check on the tax credit. The First-Time Homebuyer Credit allows buyers who are eligible to receive a tax credit of $8,000 for homes that are purchased prior to December 1, 2009. Home buyers can claim the credit on their 2009 federal tax return and enjoy a reduction of their tax bill, dollar for dollar. Eligibility guidelines include:

  • The transaction must close by November 30th

  • The home must be the principal residence of the taxpayer

  • The home buyer must live in the home for 36 months following the purchase

  • The tax payer and his/her spouse if applicable will not be eligible if either has owned a home within three years prior to the eligible purchase

When considering the purchase of a home, you should also give careful thought to all of the aspects of home ownership. Many times, buyers can become so caught up in the idea of owning a home that they forget about such mundane areas as maintenance and repairs as well as having to pay property taxes and homeowners insurance. Also, make sure you consider whether the home is convenient to your work and the school district you want your children to attend. Will the house still be your dream home when you grow tired of the daily commute?

When you are thinking of purchasing a home, it can be easy to become influenced by the decisions of other people, but this can be a huge mistake. Remember that it is you that must live in the home, not usually your friends or extended family members. This means that ultimately it will be you who has to put up with all of the things that your friends and family do not notice about the home. Make sure you buy a house that makes you happy, not others.

Finally, while it can be hard, try to avoid focusing too much attention on the deal. While negotiating a good deal on a home is a good idea, remember that finding the lowest price is not always the most important thing, especially if you plan to be in the home for quite some time. Remember that although you might find a lower price on a short-sale or a foreclosure, you will likely also be in store for some surprises as well (read: Buyers beware with foreclosures). Sometimes it's better to pay a bit more and be able to settle into a home you love faster.



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