Before you sink hundreds of thousands of your future dollars into mortgage payments, you need to ensure you do not get in over your head. Before you make probably the biggest and most important purchase of your life, you need to consider how this house will feel now, tomorrow and 10 years from now.

Here are four of the biggest mistakes you could make before purchasing your new home, and advice on how to avoid them.

Location will always be most important:

The location of your home includes far more than the value of the real estate. And while you may be comfortable in your current state with the location of the home, you have to factor in how your family could evolve. What school district does the home fall in? How far are the highways and is there good public transportation? Try to find out everything that may be relevant, location-wise, before buying this new home.

You may enjoy living close to parks, but frequent events at the park may cause heavier traffic near your home than you enjoy. The block that I live on slopes imperceptibly, causing one end of the block to get inundated with water when there is very heavy rain. The town closes that part of the street and the houses on that end of the block tend to flood when this happens, which is not often. However, the longtime residents are familiar with this. Speak to neighbors and townies to find out daily affairs — and the quirks that you can only learn from living there.

The right house to buy — and to sell

As with any investment, you must keep in mind how much value you will be getting out of the purchase. With a house, you have to keep in mind the future of this purchase, which centers around the resale value, especially if you do not plan on living there long-term. Do your utmost to figure out the most realistic time frame of how long you will own this house, because the shorter amount of time you stay in your home, the harder it will be to sell. The quicker you try to sell, the less equity you have built up in your house, especially without a large down payment.

Living in your home longer allows you to build more equity, and lets the property increase in value. However, if you are buying an old house, you will need to do some remodeling. If you do not, the house will hardly fetch more than what you spent because the kitchens and bathrooms are now twice as old.

Make sure your finances are in order

Your credit score is certainly just as important if not more than your actual budget because it will determine the rate you will pay on your mortgage. A better score could mean thousands of dollars less in payments over the life of your mortgage. As you may be aware, your credit score is super-sensitive to credit card purchases, closing or opening credit cards and other loans.

For that reason do not buy anything on credit (yes, that means with your credit card) once you have completed the loan application until you have closed the sale. Avoid at all costs the purchase of any new:

  • Automobiles
  • Heavy appliances like washers, dryers and refrigerators
  • Lawnmowers and other outdoor equipment
  • Expensive electronics like computers
  • Big pieces of furniture

Slight alterations in your credit ratios could cause your score to change and an underwriter will deny your loan.

Fitting the budget

This goes without saying. The housing crisis and indeed probably the entire dismal state of our economy came about because of people buying houses out of their reach. Just because you can afford the mortgage doesn’t mean you can afford the home. Aside from energy, water, heat and other periodic maintenance fees on the home you also have to factor in extra expenses like:

  • Private Mortgage Insurance (PMI)
  • Annual Property Taxes
  • Home Owner’s Insurance
  • Repairs and Upkeep

Consider finding a home that you can afford and pay it down in 15 or 20 years. This will put you in a much better position in buying and in building equity on the home in case you want to sell it in the future. If you can, do not lock yourself into owning just half the home in 15 years when you could have otherwise owned a different one in full.

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