Buying your first home is exciting, but it can also feel overwhelming if you’re not sure what to expect. Maybe you’ve already scrolled through beginner homebuying tips or asked friends and family for guidance. Those are great starting points, but it’s also important to know the common mistakes first-time buyers make. Understanding them early can help you avoid costly setbacks.
What Are Some Common Mistakes First-Time Homebuyers Make?
What should first-time homebuyers know before starting their search? Whether you’ll be purchasing a home in the near future or you’re just getting started, it can be helpful to understand some common homebuying pitfalls.
The following mistakes are easy to make, but they can have serious consequences.
Not Looking for Assistance Programs
Buying a home for the first time is a challenge, but if you qualify for one or more programs designed to assist first-time buyers, it could be a lot easier. Here are some of the options that may be available to you:
- State or local down-payment assistance programs
- United States Department of Agriculture (USDA) loans for low- and moderate-income buyers
- Federal Housing Administration (FHA) loans
- VA home loans for veterans, servicemembers, and their families
Many of these loans require low down payments (or none at all), and most have flexible credit and income requirements.
Skipping Mortgage Pre-Approval
Wondering what not to do during the homebuying process? Avoiding mortgage mistakes is critical, and skipping mortgage pre-approval is a serious blunder. When you take the time to get pre-approved, you’ll walk away with two key benefits:
- An estimate of how much a lender is willing to let you borrow, based on your current financial information.
- A clearer picture of your price range, so you can focus on homes that fit your budget and avoid wasting time on ones that don’t.
With a pre-approval, you can shop for homes with much more confidence. In a competitive market, a pre-approval letter also helps you stand out—sellers are more likely to take your offer seriously when they know a lender has already reviewed your finances.
Although they sound similar, pre-approval and pre-qualification aren’t the same. A mortgage pre-approval involves a deeper review of your income, credit, and debts, making it more reliable in the housing market. Pre-qualification is a quick, informal estimate of what you might be able to afford based on basic financial information you provide.
Getting Too Emotionally Attached
When you find a home you love, it’s hard not to start thinking about the future. There’s nothing wrong with knowing what you want, but if you covet a particular home a little too much, you could end up overpaying or overlooking potentially serious issues.
Getting too attached is one of the most common house-hunting mistakes. Stick to your budget and remember that if you can’t get the first dream home you spot, another will come along.
Not Getting an Inspection
Most home sales come with an inspection contingency. This means that if a professional home inspection uncovers major problems, you can back out of the deal or renegotiate.
Some homebuyers waive inspections to speed up the closing process. Others do so because it makes their offer more attractive to the seller.
However, when it comes to avoiding mistakes when buying a home, skipping the inspection is near the top of the list. If you forgo the inspection and later discover that the house has a cracking foundation or other major issues, you’ll have to pay for repairs yourself.
Buying More House Than You Can Afford
If you get a mortgage pre-approval, you’ll know how much you can finance. However, just because you can spend a certain amount doesn’t mean you should.
Spending too much is one of the biggest financial mistakes new homeowners make. If you buy a home at the high end of what you can afford, you might end up putting so much toward your mortgage payment that you have trouble covering other expenses.
Not sure how to determine what’s reasonable? As a general rule of thumb, your mortgage payment should comprise more than 30% of your monthly income.
In a similar vein, you shouldn’t put all of your savings toward buying a home. If you deplete your emergency fund to pad your down payment and then run into a financial crisis, you could be in trouble.
Rushing Through the Process
If you’ve been saving to buy a house for years, it’s understandable that you want to find and close on your first home as soon as possible. But keep in mind that a home is the biggest purchase most people will ever make. As such, a little patience is warranted.
If you’re willing to take your time, ask lots of questions, and carefully weigh your options, you can make smart homebuying decisions.
Do Your Homework to Avoid First-Time Homebuyer Mistakes
Buying a home is a learning experience, and it’s impossible to know everything before you start. That being said, the more first-time homebuyer mistakes you can avoid, the better.
By taking the time to research the process, create a solid plan, and steer clear of first-time buyer errors, you’ll be far more likely to end up with the home of your dreams and set yourself up for future success.
