Financial Advice: Avoiding Common Home Buying Mistakes and Saving Money

Buying a home will most likely be the largest purchase in your lifetime. It is a decision not to enter into lightly. Following this guide will help to avoid the common pitfalls.

Unrealistic expectations

Features like a basement, porch, screened back porch, and multiple fireplaces are not common in all areas of the country. It's possible that the home of your dreams doesn't exist or isn't for sale in your chosen area (and in your price range). Lowering the number of required amenities will make searching for a home easier.

Not seeing enough places

Some people are so excited by the idea of moving that they fall in love with one of the first places they see and will accept any flaw with it. It's best to see many places before choosing one. While getting every little feature desired isn't realistic and settling will be inevitable, don't jump on the first place. Shop around, a lot.

Not using your own realtor

Some realtors are so pushy and annoying that it seems easier to do the search yourself and then work with the seller's agent. This is a huge mistake because the seller's agent is only interested in selling what he/she has listed. Your own agent is a necessary ally. If desired, it's perfectly fine to do searches on your own and then bring in your own agent. But before viewing, your own agent should be with you.

Buying a house that needs expensive upgrades

Unless the house is selling below value, it isn't a good idea to buy a house and then do $50,000 in upgrades. Taking out a separate loan to pay for the upgrades is an even worse plan. Upgrading a newly bought house could lead toward financial difficulties. Even if the plan is to use cash for the upgrades, that extra money would be better spent toward the down payment.

Buying what you can afford (as opposed to less)

In this economy, everyone needs to live below their means. This allows for saving money and being prepared in case the bad economy becomes even worse. It also allows for other events such as changing to a job that pays less, or if your household changes from two incomes to one.

Issues with the home inspection

Inspectors have a long list of issues that the home must pass before a bank will provide financing. The issues that generally come to mind when thinking of an inspection are peeling lead paint and the foundation. However, the inspector is using a long strict list that covers many areas inside and outside the home. Every time a home purchase goes to inspection, the customer must pay for the inspection regardless if the home passes. This can get expensive very quickly if the customer keeps looking at homes that do not pass inspection.

Generally the seller will fix something cheap like a broke window that keeps the home from passing the bank's inspection. The buyer should never pay to fix anything remotely expensive because the sale can fall through and then the money spent on fixing a home that wasn't yours is lost.

If not using a bank some buyers will try to skip the inspection all together. However, it isn't possible to see all the problems in a home with the untrained naked eye. Regardless if a bank is involved, the buyer also should be using their own inspector who will be looking out for their best interests. To avoid paying for two home inspections on a house that may not pass, do the bank inspection first. If the house passes the bank's inspection then bring in your own inspector. Having your own inspector is as important as having your own realtor - these are the people on your home-buying team.