Real estate purchases can be a cornerstone in your personal finances, and are often one of your largest expenditures in terms of time and money. Because of this, you need to be aware of certain mistakes that could stand in your way. By identifying these mistakes and knowing how to avoid them, you can substantially increase the chances that your real estate purchase will be successful and profitable.

Begin by sitting down at your computer or with a notebook and pen, and list your needs, assets, and liabilities when beginning a real estate purchase. What do you need in a house? How many bedrooms and bathrooms? How much do you have as a down payment, and how much can you realistically afford to spend each month on a mortgage payment? How much debt can you incur? It also helps to get pre-approved for your financing.

Once you decide on what type of real estate you want in which area, you then need to learn everything you can about the current real estate market in that locale. Use the Multiple Listing Service (MLS) in your prospective area, as well as classified Internet and print ads (http://www.craigslist.com and local newspapers) to determine at what price properties are selling in the specific area in which you want to buy. Websites such as http://www.zillow.com provide estimates of value.

Choosing the right realtor can help you find your perfect property. You can spend a long time looking with no success, and then the first day you walk into a realtor's office, he or she can show you that perfect parcel that you end up purchasing. A good realtor puts sellers and buyers together. Look for a realtor that meets your needs. Two websites that can help your search are http://www.REALTOR.org and http://www.realtor.com (National Association of Realtors).

When you find a piece of real estate that meets your criteria, secure it by signing a purchase offer. This secures the property and begins the purchasing process, but does not permanently bind you in case you change your mind if you have included standard contingencies such as inspection contingencies.

Once you and the seller have agreed to the terms of the purchase, write up an agreement that spells out all the terms, including any conditions and contingencies. Both you and the seller need to sign the agreement. Everything must be in writing in order to be part of the final agreement. You should always be given a copy of any papers you sign by the real estate agent.

Mistake #6: Neglecting to read all of the deed restrictions, restrictive covenants, and fees that come with the purchase.

The title company supplies you with a title report that tells you of any restrictions on the real estate you are purchasing. Go over this report thoroughly, and if you don't understand something, ask questions. In terms of purchases involving condos or houses in gated communities, get accurate assessments of the fees that come with the property. Be aware that these fees can go up in the future.

Inspect every inch of the house and property. Have the house inspected for every possible problem that could occur. This includes termites, dry rot, radon, mold, lead, the septic system if applicable, as well as any easements on the property. If there is a well, have the well tested before you make the purchase. Check your property lines for any encroachment. Hire a surveyor to mark property lines if there is any question. Be sure to do a final inspection before signing the escrow papers.

The process of purchasing real estate can at times seem daunting, but the end result can be very satisfying. The rewards are sweet indeed, particularly when you are living in the home of your dreams. Because real estate purchases are usually the largest you will make in terms of personal finance, they can also reap you the largest rewards when you avoid these 7 mistakes.