New Home Buyer? Beware of this Mistake

After finally finding that "dream home," what buyer isn't tempted to stretch as far as possible -- and drain all available savings -- just to make the numbers work?  It's one of the big homebuyer mistakes.

Often, buyers fall in love with a property, and they try to rationalize the decision. You need to be disciplined about it.

Too often, buyers set a price range and then fall in love with something that costs more. So they figure they'll borrow the difference.

But you need a reserve fund -- something you hold back to address unexpected problems, like the refrigerator that quits in mid-July, or the "like-new" water heater that dies the day after you move in. Or the realization -- after seeing the neighbors sunbathing once too often -- that you need a privacy fence, quickly.

In most homeownership situations, there are going to be some unforeseen circumstances. So you want to make sure you have some funds behind you.