13 Common First-Time Home Buyer Mistakes And How To Avoid Them

For many first-time home buyers, purchasing a house fulfills a lifelong dream. However, you won’t be able to achieve this dream without having some new experiences – maybe even a few you didn’t see coming.

First-time home buyer mistakes are common, and though not always a huge deal, some can lead to unwanted process delays and additional costs down the road. Fortunately, by simply familiarizing yourself with the common mistakes of first-time home buyers, you can avoid making them.

Common First-Time Home Buyer Mistakes To Avoid

From not saving enough money to not paying enough attention to your credit, to simply waiting too long to make an offer, home buying mistakes can slow you down. Here are some of the most common home buyer mistakes and how you can steer clear of them.

1. Not Starting The Approval Process Early

Shopping for a home without initial approval – also called mortgage preapproval – can be a big mistake. Getting preapproved is the simplest and most accurate way to determine how much house you can afford. An initial approval through a mortgage lender gives you a reliable price range to stay within so you don’t set your sights too high or take on more than you can handle financially. And as a bonus, being preapproved makes you appear as a more serious buyer to sellers.

“Prequalified” or “prequalification” is another term that different mortgage lenders use. Prequalification provides a preliminary estimate of what you can afford to spend on a house, but it doesn’t typically give you the financial backing that home sellers want to see. By verifying some of your financial information, lenders can also offer preapproval.

Your initial approval doesn’t guarantee you a mortgage, but it helps you make a stronger offer. Rocket Mortgage^® can also offer Verified Approval¹– an even higher level of initial approval where we verify your credit, income and assets with the documentation you send to us.

How Can You Avoid This Mistake?

Reach out to reputable mortgage lenders and ask questions so you can find the right fit. Then apply for mortgage preapproval before you start shopping for homes. Remember to first make sure your finances are in good standing so you can receive the most accurate preapproved loan amount. 

2. Looking At Only One Mortgage Rate Quote

Getting a mortgage quote from multiple lenders will take some time, as it typically involves speaking with a professional and providing financial documentation. Although relying on the first quote you get may be time-efficient, it may not be the most cost-efficient. That’s because you may not be accessing the lowest interest rate and monthly mortgage payment available.

How Can You Avoid This Mistake?

Getting multiple quotes is the best way for a buyer to choose the right lender and secure a mortgage with the best possible loan conditions. Research reputable lenders, both online and by word-of-mouth, and compare a few before selecting one.

3. Not Working With A Real Estate Agent

Real estate agents are real estate experts. Although you may save some money by buying without a real estate agent, having a professional in your corner can ease anxiety and make the home buying process go more smoothly overall. Real estate agents know the home buying process in and out, making missteps on your part less likely.

How Can You Avoid This Mistake?

Reach out to family members or friends who’ve recently bought a home or look at online reviews to find a real estate agent who’s compatible with your home buying needs. Speak with a few agents to understand the value they’ll bring to the table. You’ll likely find that agent fees are well worth the cost.

4. Buying More Home Than You Can Afford

When a lender reviews your financial information for approval, they use your debt-to-income ratio (DTI) to determine how much of your monthly income is going toward monthly debt payments. But DTI doesn’t account for expenses such as groceries, utilities, gasoline and health insurance. As a result, it may not be wise to buy a house for the entire amount you’re preapproved for.

How Can You Avoid This Mistake?

Be sure to factor in all of your regular expenses – not just those that influence your DTI – when determining how much you can afford to spend on a monthly mortgage payment. In addition to your current budget, consider any extra costs – such as potentially more expensive utility bills – that will come with being a homeowner.

5. Not Checking Your Credit Report

Ignoring or not observing your credit score throughout the home buying process can lead to unchecked errors that could impact your loan approval or result in a less favorable interest rate or repayment term.

Although a lender will pull your credit before preapproving you, lenders will recheck it just before the scheduled closing day. Any changes in your credit report could mean changes to your loan. For example, suppose you apply for new credit cards or fail to make payments on existing credit cards leading up to closing day. Your credit score could drop significantly, possibly making it hard to qualify for financing.

How Can You Avoid This Mistake?

Monitoring your credit report and contesting any errors can help prevent credit-related delays. Also, once you’re preapproved, seek to avoid taking on new debt or missing payments on the existing debt you came in with. Any changes to your credit during the time your preapproval is effective could affect your final loan approval.

6. Waiving A Home Inspection

A home inspection can be important for avoiding future problems within the home. While some home buyers may choose to forgo an inspection to save time and money, the peace of mind an inspection can provide shouldn’t be undervalued.

A home inspection protects home buyers and lenders in the event of serious issues with the home’s structure or core systems. After the home inspection, you’ll receive a report with any identified or potential issues in the home, and you may be able to use this information to negotiate repairs or a lower purchase price with the seller.

How Can You Avoid This Mistake?

Oftentimes, the buyer’s agent will schedule a home inspection, but you can take the lead on this as the buyer. Talk with your agent about making your offer contingent on a home inspection. If you’re thinking of waiving the home inspection, be sure to speak with your agent about this possibility and its potential repercussions.

7. Spending All Of Your Savings

Buying any house typically requires cash upfront in the form of a down payment and closing costs. It’s a good idea, though, to save some money beyond the bare minimum that you’ll need to get into a house.

Draining your savings can leave you vulnerable in an emergency situation, so it’s not recommended.

How Can You Avoid This Mistake?

If you need more time to save money, you may want to push back your house hunt and build your savings. You can also speak with your lender about the possibility of making a smaller down payment, or you may decide to shop for a less expensive home. A home that doesn’t cost as much will allow you to spend less money upfront and have more left over.

The Bottom Line: Some First-Time Buyer Mistakes Are Preventable

You can avoid many first-time home buyer mistakes by learning from those who’ve bought a house before you. If you have trusted friends or family members who’ve recently purchased a home, ask them what they’ve learned along the way. Perhaps even more valuable is the advice of a trusted real estate agent.

Ready to take the first or next step in your home buying journey? You can start the approval process or talk with a Home Loan Expert about finding the best mortgage for your situation.

¹ Participation in the Verified Approval program is based on an underwriter’s comprehensive analysis of your credit, income, employment status, assets and debt. If new information materially changes the underwriting decision resulting in a denial of your credit request, if the loan fails to close for a reason outside of Rocket Mortgage’s control, including, but not limited to satisfactory insurance, appraisal and title report/search, or if you no longer want to proceed with the loan, your participation in the program will be discontinued. If your eligibility in the program does not change and your mortgage loan does not close due to a Rocket Mortgage error, you will receive the $1,000. Client must submit the claim to Help@RocketMortgage.com or contact Client Relations at 1-800-863-4332 to complete and return a claim form to Client Relations in order to claim the $1,000. Additional information will be required for tax purposes. This offer does not apply to new purchase loans submitted to Rocket Mortgage through a mortgage broker. Rocket Mortgage reserves the right to cancel this offer at any time. Acceptance of this offer constitutes the acceptance of these terms and conditions, which are subject to change at the sole discretion of Rocket Mortgage. Additional conditions or exclusions may apply.