Five Mistakes that First Time Homebuyers Make

You have decided that the time has come to purchase your first home. Congratulations, you are taking a major step on your way to living out the American dream. The euphoria that overtakes you when you enter that perfect home, that home that you want to make your own, is incredible, overpowering, even life-changing. That rush, however, could be quickly dashed and dampened if you make any of these common 5 mistakes that of first time homebuyers.

1. You're mother might have told you to shop around; this is the time to thank her for that bit of wisdom. Failing to do enough shopping when looking for a home can lead to serious problems. Your excitement can make even a poor choice seem like an ideal one. Shop around and get help from a professional. Carefully consider the neighborhood and the market.
Nothing is worse than finding that perfect home and then discovering that it is well out of your means. Three of the five most common mistakes first time home buyers make involve poor planning concerning their financial condition.

2. Mistake number two is failing to know the condition of your credit. I've seen people in the office with their mortgage lender receiving the news that their identity had been compromised and they were ineligible for a mortgage. The devastating possibilities of not keeping track of your credit report can cost you your first home. Fortunately, thanks to the FACT Act you are entitled to a free copy of your credit report annually from the three major credit-reporting bureaus. Visit www.annualcreditreport.com right now and see what is being reported about you. Make sure that it is accurate.

3. Once your credit report has been verified for accuracy secure that mortgage! Research lenders and programs (remember that failing to shop is mistake number 1), choose a lender and apply for pre-approval. See what the lender is willing to lend to you. Knowing how much you can borrow will help narrow your search to homes within your range and help you avoid the disappointment of finding that your home of choice is outside what a lender will lend you.

4. A startling fact to keep in mind is that 100% of foreclosures are on loans that the lender felt the borrower could repay. Just because the lender will lend you all that money does not mean that you can necessarily afford that much home. Remember that with that home comes bills that you may not have paid before, taxes, and various expenses, like lawn care. Budget for all of these and more. A general rule of thumb is that your housing expense, i.e. your mortgage, should be around 30% of your monthly income. Calculating the true cost of that home is crucial if you want to be sure that you can afford to keep that home.

5. The final big mistake that first time homebuyers make is failing to get the house inspected. There are thousands of things that can be wrong in that house that you think is so perfect. Hire an inspector to make sure the house is sound. Do not assume that since the bank is having the house appraised that you do not need an inspector, that is not what the appraisal is for. Also do not assume that because the seller has done an inspection everything is OK, that inspector was working for the seller, not you. Get the house inspected!

There are many things that can go wrong when looking for your first home. Don't let any of these five mistakes be one of those things that go awry. Buying your first home should be euphoric, do everything you can to keep it that way.