Before You Buy a Home: Common Pitfalls and How to Avoid Them

My husband and I bought our first home in October, 2002. We were a single income family with an infant, and in retrospect, definitely bought more house than we could afford. Prices were rising, though, and this was the first house we'd seen that we were comfortable with. It was close to his work, and he could get there without taking any highways, always a big plus in such a populated area. The schools seemed to be decent, the crime rate was low, and the neighborhood seemed perfect for children. We were hooked.

Little did we know that it would turn into a huge ordeal. The real estate agent's husband, she said, ran a mortgage company and would be happy to work with us to finance the house. She even had him come over when we were thinking about making an offer to help us figure out if we could afford to buy it. We eventually made an offer, negotiated a little, and signed the papers, planning to close at the beginning of October, at the latest. In hindsight, we made many, many mistakes in buying a home, which I hope, with this guide, you can avoid.

Never talk money with someone who has a stake in the house selling. While this might seem obvious, it is all too easy to forget in the rush, excitement, and confusion of buying a home. We should have gone to a bank or other financial institution, or even another mortgage company, any of which would have likely told us how hard it would be to afford the house (which was selling for just over five times our annual income.) But this man, whose wife would receive a fat commission if the house sold, told us that of course we could afford it, and promised us that we could get approved for a mortgage to cover it.