I set some goals towards the end of this year (fuck new years…) one of which is the purchase of a place in 2010, preferably before April. I have just secured an agent. But, I know there’s more to it then that and I want to make sure I’m protected. So I have been doing a bit of research on every facet of the home buying process. Tonight I stumbled upon an awesome post on one of my favorite finance blogs, Mint.com entitled: First Time Home Buyer Mistakes.
The post highlights the six biggest mistakes us new home buyers make on our first go-around. The post is very applicable to any major purchase or life decision, but if you’re considering buying a home, particularly if it’s your first home I recommend checking it out. The abridged list of 6 is as follows:
Falling in love with perks that don’t add value – Somethings may sound nice, to you individually, but actually DO NOT add value to your home. For example swimming pools, sure they may on average add value, but they are expensive to maintain, not wanted by all purchasers (should you decide to sell in the future), and cause your insurance to go up – overall a bad value.
Failing to budget for all those things that will break down – Renting is easy, something breaks, someone else fixes. When you own, you need to consider YOU will be fixing, and YOU will need to pay for the replacement/fix.
Overestimating the tax savings – For almost everyone it’s non-existent/not important. You get tax breaks on the interest of your mortgage, the extra points you pay back to the bank for your loan. You still have to actually pay back the loan, so don’t worry about the tiny % this equals in tax savings.
Not researching the neighborhood – I really liked what Mint wrote here:
“Hell is other people,” said the existentialist philosopher Jean-Paul Sartre — and sometimes they live next door.
Research your potential neighbors as well as the overall temperature of the community, the first may affect your sanity, while the latter may affect your property value.
Overestimating your enthusiasm for renovations – Again, you’ll be doing everything, and paying for it to boot. First time buyers have a tendency to believe they can save a lot of money by taking a fixer-upper.
Do your homework - Hmmm…. as a manwhole reader this should sound familiar. And if it doesn’t you need to drop the beer and re-read: http://www.manwhole.com/top-5-personal-finance-pitfalls/. Do your homework, be prepared, to avoid the 5 things above, and to take care of the many more details involved in purchasing a home.
Check out the original post for more details.
