Here are eight easy-to-avoid mistakes that could cost you your home before you’ve even had a chance to enjoy it. With that reality in mind, here are some key steps to follow when selecting an agent: If you put every cent you can scrape together into a down payment for your new home, borrow money from relatives to pay your closing costs, and plan on charging all repairs and future maintenance to a credit card—you’re spending too much. Need to cash out your retirement accounts to make ends meet? Don’t. In reality, many of these seminars usually look a little more like this: You start by calling that toll-free phone number to make a reservation. Then, you sit through a three-hour sales pitch for books, tapes, CDs, and specially discounted services hawked by seminar gurus who have most likely never bought or sold a piece of real estate in their lives. But they are hoping to capitalize on your vulnerability. If you follow the advice of your so-called expert, you may find yourself making dozens of lowball offers that get rejected, until you find a seller who will carry all of the financing at 18% interest with a three-year balloon payment. In the end, you’ll have lost a lot more than time; meanwhile, everyone else—including the “guru” and the bank—will make a fortune off your mistakes. How can you tell whether the neighborhood is bad? Sometimes it’s obvious, but a little research can also be very helpful. Try doing the following: What’s wrong with low-cost loans? Many so-called “exotic” loans have rates that start low and then balloon. Others are adjustable, which means this year’s low rate could become next year’s exorbitant rate. How do you spot problems—especially when they’re covered, hidden, or inside the walls? Home inspections are your best tool for finding what’s wrong, and qualified home inspectors are trained to check into every system and appliance. Of course, you’re not going to turn down your dream house just because it needs a new coat of paint, but you may be able to negotiate the price or ask the owner to have the house painted before closing. What happens if you decide you would prefer to save the money you would spend on a home inspection and instead buy a new barbecue grill? There’s a good chance you won’t notice that the interior walls are crumbling, because a fresh coat of paint can work wonders. Maybe a vacation in Hawaii next December sounds wonderful to you. Or what about buying patio furniture or maybe new decking or a spa for the backyard? If this sounds like a great plan, think again. Having bought a new home, you have a responsibility to care for and maintain your investment. If you spend yourself into more debt, the first minor setback—such as a lost job or a healthcare emergency—could send you into foreclosure.
