10 Common Home Buying Mistakes

Buying too expensive of a home.

This is a problem that radiates through all groups of society.  From low to middle class to the ultra-high net worth. Buying a bigger more expensive home, causes additional financial woes.  Home insurance premiums rise, heating and cooling bills increase, typical house hold repairs are more expensive, and lastly the mortgage payment is much higher.

Only checking with one bank or online mortgage lender.

When you are financing a large sum over 15 to 30 years half a percent makes a big difference.  Check with local credit unions.  They tend to offer some of the best consumer rates, since they don’t play by the same rules as bigger box banks do.  I would also recommend checking online mortgage companies like rocket mortgage by quicken loans. Also check out my contribution at Readers Digest. They have an additional list of items to look for when buying a new home too.

Not considering property taxes.

Property taxes in some states cause huge problems for home owners. Less expensive homes tend to offset these expenses to a degree.  For the most part, you cannot control what state you live in or currently live in. However, if you live close to the border of your state, it might be prudent to check the other states property tax.

Not getting a thorough appraisal.

Most of the time getting an appraisal from a trust worthy organization can be the difference of buying a gem of a house or a money pit.  Spend the extra money to make sure you know what you are getting and any problems areas that might come up in the next 5 years of home ownership.

Buying a house with a pool.

Statistics show that buying a house with a pool, makes reselling the home more difficult.  It takes the right buyer that wants to maintain the pool.  The additional water expense, chemicals, and time involved can be a major deterrent.

Not having a down payment and reserved emergency fund.

Having a down payment is a great idea.  It allows to build home equity quickly, cuts the cost of your monthly payments and lifetime interest of your loan.  What is often forgotten bout is having an establish emergency fund with 3-6 months of your yearly salary for any unexpected costs that might arise.

Paying for points on your interest rates.

Very rarely should you pay more money up front to lower your interest rates by buying points.  Especially if you do not have an adequate down payment.  However, figuring out the break-even for buying points versus not, is the real question.

Not looking at crime around or near your homes location.

If crime is rampant near your home, this can drastically affect your property value.  Looking for crime trends by calling the local police station and inquiring about the types of crime and how many crimes in your area can save you some heartache.  

Not filing for your homestead exemption.

Though uncommon to most, this has in the past came back and bit some home owners over the year.  The homestead exemption saves you on your property taxes, and if not filed before years’ end can wreak havoc on your mortgage escrow.

When shopping homes, not taking the time to compare what other homes are selling for around that same area.

Real estate unlike the stock market are sometimes difficult to value on a day to day basis.  One way of comparing home prices is by dollar per square feet.  However, you want to make sure you are comparing two homes around the same age and quality.