10 Deadly Sins Committed by First Time Home Buyers

December 9, 2011

Author: William M. Davis

Most first time home buyers are excited about owning their very first home. This is a dream come true for most people. But that excitement and the dream of home ownership can quickly turn into a financial disaster if not handled with care.

Take a look at the 10 deadly sins by first-time home buyers:

1. Not cleaning-up their credit report. Credit scores will determine a home buyer’s credit worthiness and the interest rate on the home loan. A higher credit score means better rates, whereas a bad credit score means dealing with subprime mortgage lenders, higher interest rates and undesirable terms and conditions.

2. Neglecting to shop around for the best home loan deals. Comparative shopping is essential when it comes to home loans. Many first time home buyers miss out on good mortgage deals because they neglect to shop around.

3. Purchasing a home with poor credit. This is one of the biggest mistakes first-time home buyers make. They fail to get their credit in order before they start looking for a home.

4. Buying a home even though they can’t afford it. Coming-up with down payment is not the only financial investment towards home ownership. Being able to make the monthly mortgage payments also needs to be considered. Many first time home buyers fail to keep this in mind and in turn suffer in the long term.

5. Not taking into consideration other outstanding debts. First-time home buyers often forget that they also have to pay bills like car notes, cell phone bills, utility bills, credit card payments, insurance plans, groceries, bank loans, and other monthly expenses in addition to their mortgage.

6. Overlooking the fine print on the contract. Being able to purchase a home for the first time is a dream come true for many. This is one of the most important and expensive financial decisions people make in their lifetime. This is why it is important to read the fine print before signing on the dotted line.

7. Not considering what they can afford. There is a big difference in what first-time home buyers qualify for and what they know they can afford to pay each month. Many end up buying a home that is outside their price range.

8. Stretching beyond their means financially. Doing this can cause a lot of stress and financial difficulties in the future. First time buyers should Work on increasing their monthly income or pay off other debts before they begin the home buying process.

9. Skipping mortgage payments to pay credit cards. This is a huge mistake and can seriously affect your credit rating and future credit.

10. Shopping for a home without pre-approval. First find out the exact amount you qualify for before you even start looking for that dream home.

Being aware of these10 deadly sins that most first time home buyers indulge in can help you protect yourself from costly mistakes. What were your experiences as first time home buyers, we would love to hear you