Anyone who has owned a home can tell you that it can be a strenuous learning experience. Sometimes the excitement of owning your own home can cause you to lose sight of what you really need out of a home, and worse yet — break your budget. Below are a list of some of the ways I have seen first-time home buyers make their first mistakes.

1. Setting the Budget
When analyzing how much you can really afford for a house, stay within your means. I have seen couples buy a house for the maximum amount that they would be able to afford, because to them, the payoff is worth it. These same couples are struggling to make their mortgage every month. Peace of mind, knowing that you are living well within your means will cause less stress for you in the long run. Think about the families today who purchased their home for the very top dollar that they could afford within the last few years. With the housing market crash, many have lost their homes to the bank causing extreme financial hardship. Those who bought at a comfortable price for their income, are definitely feeling the hurt, but will most likely be able to stick it out until the market gets better. We should be able to take a big lesson-learned from the mistakes of these past homebuyers. Be sure to take disasters like this into consideration, as well as your property taxes, homeowners insurance, and HOA’s when setting your top-dollar budget.

2. Budget Breakers
Finding your dream home for $500,000 may seem to be an unbelievable deal. However, if your budget for a house is $400,000, it isn’t the deal for you. Many first time homebuyers get so desperate to own a home that they forget to think rationally. Definitely set your budget ahead of time and make a vow not to break it. Going over your budget will only lead to more learning experiences when you are in over your head.

3. Renovating and Keeping the Home’s Value
Often times new homebuyers purchase a fixer-upper and dig right in to make it the home of their dreams. This is a realistic approach, but if you don’t watch, the money will add up fast. Many families immediately start tearing down walls and ripping up flooring while the credit card bill multiplies. It can be very exciting to create your dream home. Just be sure to take your time, and pay for it as you go. Racking up debt won’t allow you enjoy your new home. And don’t let the costs get away from you. Track what you are spending and make sure that it will increase the home’s value. If you merge two smaller bathrooms into one, this may be more comfortable for you, but think how it will affect your resale value? Will a 3 bedroom/1 bath sell as well as a 3 bedroom/2 bath? Definitely not. It is your home, but consider the possibility that you may need to move due to an emergency, or a new job, and you’ll want to protect your investment and get top-dollar back when you sell your home.

4. Overlooking Flaws
Sometimes finding homes within your price range can be a tall order. Because of this, we often overlook some pretty large flaws, just to be able to own our own property. For example, my husband and I bought a beautiful mid-century home in Sacramento. The flaws in this home were fixable: one bathroom had a blue toilet, sink and shower, and the other had a pink toilet, sink and shower. At the time, we thought it would be no problem to renovate these eyesores, but it proved to be a costly and exhausting endeavor. More severely, some people purchase homes with flaws that they cannot fix. 3 story home? It may be beautiful inside and roomy, but do you really want to chase your three kids up two flights of stairs? Decide what things are important to you before you go house hunting, so you aren’t distracted by the desire of owning real estate.

5. Thinking Too Big
Why does your first house need to be 2,400 square feet? Chances are good that your first home is not the home you are going to end up in. Keeping all of these common mistakes in mind, your first home will be a stepping stone. Something you will most likely grow out of, and learn the things about yourself that you can carry with you on the next home. Start small, learn and grow from there.

Do you have something to add? A learning experience you or someone around you has encountered? Post a comment to add to the list!