Since I'm in the market for my first house, I've been paying close attention to what my friends and family do when they're shopping for homes. I hoped it would pay off and I wouldn't make any mistakes when it came time to buy home.
While I haven't made as many mistakes as other people, I've still made a few. They're all pretty common and many homebuyers make them - especially first time homebuyers - but here is how you can avoid them.
I started looking at houses before I prequalified for a mortgage. Working in real estate I understood that prequalifying was not the same thing as qualifying and there was no guarantee that I'd have the money in hand when it came time to close anyway, so I assumed it didn't matter. Unfortunately, I was wrong. I underestimated what I could afford and qualify for and wasted a lot of time looking at smaller houses. When I did want to make an offer, I found out I needed to be prequalified.
Apply for a mortgage before you start looking. Most lenders will let you prequalify online.
Not Having the Home Inspected
Fortunately, for me, I learned this lesson by watching someone else make a mistake. A friend of mine was buying a house. When the real estate agent told her that the inspection was optional, she chose to skip it and save the money. In the six months she's lived in the home, she's dealt with foundation issues, plumbing problems and electrical shorts.
My friend bought a lemon because she didn't have it inspected first. Don't do the same thing. Pay for the inspection.
Not Creating Outs
You have to pay earnest money before you can start a contract on a house. If you decide not to buy the house later, you may lose your earnest money - unless you have contingencies written in to your contract. Personally, I didn't think I would need these little loopholes, but my friend lost her earnest money after she wasn't able to qualify for a loan. The loss set her back even farther in becoming a homeowner. Now, I plan to have as many contingencies as possible.
You can have a contingency written in for nearly everything - like not having to buy if you can't sell your house - but the seller has to agree. Be careful not to ask for too much.
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