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Buying a home, especially your first home, is an exciting and joyful experience. It can also be stressful and financially risky. However by avoiding common mistakes you can get a home that will be a benefit to you and your family, without most of the problems that lurk in the real estate arena. With care, you will find a home where you can be happy without financial damage.

One warning: Home ownership is seldom right for people who move frequently. If your job requires relocation every few years you are probably better off renting. That way you don't have to sell when transferred. Repeated buying and selling costs money, and you may not be able to sell when you need to move.

Five home-buying mistakes you should avoid are:

1. Buying too much house. It is a temptation to get a big house all the nice features you want. Realtors or sellers will enhance this temptation since they get paid according to how much you spend. However if you go overboard and get a house you cannot really afford, you will set yourself up for problems later. Don't get a house larger than you really need, or one with fancy add-ons like spas etc. unless you can really afford them.

2. Getting the wrong mortgage. Lenders today have many creative ways to help you get in trouble. These include Adjustable Rate Mortgages (ARMs), interest only loans, variable payment loans etc. All are designed to allow people to borrow more than they could with a standard 30 year fixed rate mortgage.

You will have to pay off that mortgage eventually, so be certain you can do it. ARMs for example get buyers to borrow at a low interest rate. That rate, and your payment, can go up after a few years. If you are confident you will sell within 5 years, an ARM might make sense. Otherwise avoid them. Likewise avoid interest only loans and similar traps.

3. Failure to fully investigate the house. Unless you are buying a new house with a guarantee, it is usually best to hire a professional home inspector to check for problems. Be certain the inspector provides a guarantee. And check the references of inspectors or builders, some can be slippery. If the roof needs repair you want to know that before you buy.

4. Failure to investigate the neighborhood. You will live not only in the house, but in the neighborhood as well and it's more difficult to move from a house you own than from an apartment you rent. Learn about your potential neighbors as well as about schools, parks etc. Walk around the neighborhood some evening and see how friendly the people are. Talk with them and see if they seem to be the kind of people you want to live around. Ask about problems such as bullies or drug use in the area. Drive by on a weekend night and see if there are wild parties going on.

5. Inadequate financial planning. Be certain you can really afford all the costs, plus any emergencies that come up. Remember, you not only have to pay the mortgage but insurance, property taxes, utilities etc. Ask to see a record of utility and property tax payments from the previous owner to get an idea of how much this will cost. If the owner refuses, be suspicious. You will own the house with all its problems, including any repairs needed.

Include disaster insurance in your plan, standard homeowners' policies don't cover things like earthquakes, flooding etc. If an earthquake destroys your home you are still liable for mortgage payments, so be prepared.

Buying a home does add complexity to your life since you become responsible for many things the landlord does for apartment dwellers. However it has many advantages, both financially and in terms of satisfaction. Plan carefully and a rewarding experience awaits you.

Learn more about this author, Hal Lillywhite.
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