The top 3 money mistakes you should avoid when buying your first home

The biggest mistake millennial homebuyers make
The biggest mistake millennial homebuyers make

Buying your first home is a major milestone and a major investment. If done incorrectly, the consequences can be costly.

Millennials and GEN-Yers make up the biggest share of homebuyers, according to the National Association of Realtors, so it's vital that young people look out for some of the most common mistakes, says Adam Contos, co-CEO of real estate company RE/MAX.

Here are the top three mistakes to avoid when buying your first home:

1. Not using a professional real estate agent

Contos tells CNBC Make It that when inventory is low and prices are rising, the competition for housing grows. In some markets, this can lead to a bidding war, which requires split-second decisions.

Buyers who have a skilled, full-time agent assisting them aren't alone to navigate through the sometimes-tricky landscape. In fact, young buyers can benefit greatly from the expertise of a savvy agent who understands current market conditions and can zero-in on the best home for the best price.

Do your homework, says Contos, and don't shortchange yourself by working with an uncommitted, part-time agent. Or even worse, with no agent at all.

"Buying a home is one of the most important financial decisions you'll ever make," says Contos. "Have a true professional guiding you."

2. Buying a home that's too expensive

Avoid the trap of finding yourself with a monthly mortgage above your means or owning a home that needs more work than you can afford, says Contos.

"The key is understanding the monthly costs of owning, and making sure, before you move forward, that your income covers it all with enough left over to fund the life you want," says Contos.

Do the math early in the process, and be realistic about what you can afford. After all, living in a dream home can be a nightmare if most of your paycheck must go toward covering the purchase.

"Stretching a little is fine, but only if careful analysis, insight and consideration are also part of the decision," says Contos.

3. Underestimating the final bill

"Owning a home is a huge commitment and expenditure," says Contos. In fact, it's life-changing for first-time buyers.

"You learn a whole new vocabulary. You meet new people. You develop different perceptions and values. You discover new ways to spend Saturday afternoon," says Contos. In a nutshell, it's a big move forward.

Closing on a house is just the very first step. To make sure that it's without stress and there are no surprises, invest time into learning about what you're signing and what you're agreeing too, says Contos.

Your real estate agent will explain every line item in every step from earnest money to inspections and beyond to appraisals and closing fees, he adds. Listen carefully, so you understand the whole package and can enjoy the pure joy of signing the final document and taking hold of the keys to your new home.

"Once you've decided to take the leap, the process of buying your first home can be scary and overwhelming," says Contos. "It doesn't have to be. The key is having a great real estate agent guiding you, along with a trusted adviser."

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See also:

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Real estate mogul says this is a big mistake amateurs can't afford to make
Real estate mogul says this is a big mistake amateurs can't afford to make