Buying your first home can be both exciting and daunting. You might not want to settle for anything less than your dream home, but you also need to invest wisely so you don't end up buried in debt.
The most important thing a first-time home-buyer needs to remember is "set a budget and stick to it," says Eric Wu, the co-founder and CEO of Opendoor, a start-up that allows users to buy and sell homes online. Founded in 2014, Opendoor has raised a total of $1.3 billion in outside funding, reportedly valuing the company at $3.8 billion.
"Home shopping is an emotional roller-coaster, and oftentimes you find a home that you fell in love with but it's outside your budget and people break their budget," Wu, 36, tells CNBC Make It. "But it's really important to stick to a budget and be fiscally responsible when buying a home."
So if your income isn't enough to offset the estimated mortgage payments, for instance, Wu says, chances are that your dream home should remain a dream for now.
"People don't account for the fact that the home is where you live, but also it's a financial investment. And you want to make sure you're making a smart financial decision," Wu says, so you need to have realistic expectations about what you can get for your money.
Wu explains that there are ancillary costs that can add up after making a purchase that also need to be taken into account.
"People oftentimes underestimate the amount of cost and work that goes into buying your first home," Wu adds. "So also making sure that you understand there's going to be ongoing maintenance costs, there's going to be repairs that are necessary, while you own a home and accounting for that, as well."
Of course, forgetting your budget isn't the only mistake that first-time home-buyers often make.
Real estate mogul Barbara Corcoran has told CNBC Make It that common mistakes among first-time homeowners also include forgetting to set extra money aside for closing costs, which can include real estate agent commissions and transfer or sales taxes (all of which can add as much as 5 percent to the cost of your home).
And, financial expert Suze Orman says the first thing you want to do when looking to buy your first home is to check your credit score, because the higher your score, the better the rate you can get on a mortgage.
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