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Home buying mistakes and how to avoid them

Ready to become a homeowner? Be sure to avoid these first-time buyer mistakes.

Realtor talking to a young couple on a front porch

With record-low interest rates, rock-bottom home prices, and no house of their own to sell, many young adults are well-positioned for buying their first home. If you're ready to become a homeowner, watch out for these common first-time-buyer mistakes:

Not getting a pre-qualification letter

Before you start your home search, meet with a lender or mortgage broker to determine how much money you are qualified to borrow. Having a pre-qualification letter in-hand offers peace-of-mind to you, the seller, and your real estate agent.

Overestimating what you can afford

Go through your income, expenses and investments. You may discover that you aren't comfortable spending what your lender believes you can afford.

Underestimating the costs of home ownership

The expenses of owning a home go beyond your monthly mortgage payment. As a homeowner, you'll be responsible for costs landlords usually cover, including property taxes, insurance, association dues, utilities, maintenance and repairs.

Failing to think long-term

Cosmetic details that you can change should not discourage you from buying a home. Whether you're planning to sell the house in a few years or make it your forever home, finding a home in the right neighborhood or one with a new furnace may outweigh drawbacks such as a slightly outdated kitchen or bath.

Spending all of your money

Avoid draining your savings to purchase a home or offering the maximum amount you're qualified to borrow. You want to have money left over to cover unexpected expenses that could arise after you buy.

Forgoing an inspection

Before celebrating the fact you've found a home you love, hire a professional home inspector to find any problems that could impact your decision to buy.

Forgetting the contingency clause

Consider including in your purchase agreement a contingency clause that allows you to back out if your loan falls through, the home doesn't appraise at its sale price, or you lose your job.

And once you've found the first home of your dreams, you'll need homeowners insurance to protect your investment. Contact your local State Farm® agent today!

The information in this article was obtained from various sources not associated with State Farm® (including State Farm Mutual Automobile Insurance Company and its subsidiaries and affiliates). While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. State Farm is not responsible for, and does not endorse or approve, either implicitly or explicitly, the content of any third party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. These suggestions are not a complete list of every loss control measure. State Farm makes no guarantees of results from use of this information.



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