Before you start looking for your first home, take a look at these common mistakes first-time homebuyers make.
- Not Knowing Your Housing Budget
Figure out exactly how much you can afford to pay each month in shelter costs.
Your total monthly housing costs should not exceed 30% of your monthly take-home pay. Be sure to include:
- Mortgage payments, including interest and private mortgage insurance (PMI) if applicable
- Property tax
- Homeowner’s insurance
- Maintenance costs
- Homeowner association fees
- Looking Outside Your Housing Budget
Don’t even look at houses that fall beyond your budget. It’ll only set you up for disappointment.
- Purchasing Based on Future Changes
Never make a financial decision based on projected future income. Instead, base your decision on what you can afford now.
- Treating Your Home as an Investment
First-time buyers often anticipate selling their house for a large profit in five or 10 years. Real estate is never a certain investment, and a house should not be purchased with the sole intention of earning a profit.