6 Common Mistakes First-Time Home Buyers Make

Owning your first home can be an exciting time, but it can be a little nerve-wracking too. First-time home buyers may not know where to begin the home-buying process. The key to making the process as smooth and stress-free as possible is learning from the mistakes of other first-time homebuyers.

If this is your first rodeo as a homebuyer — or if it’s been many years since you last bought a home — knowledge is power. Along with knowing where the pitfalls are, it’s important to know what to expect and what questions to ask. This article outlines the six biggest first-time homebuyer mistakes, along with smart ways to avoid them.

1. Not Exploring Mortgage Options Before Buying

First-time buyers often get a mortgage from the first (and only) lender or bank they talk to, and that’s a big mistake. Explore your lending options and talk with multiple mortgage lenders to shop for the best deals. Different lenders and brokers can offer varying interest rates and mortgage amounts. 

Your lender will also be a valuable resource for home-buying education and professional recommendations, so consider which lenders you work well with and trust.

2. Spending More Than You Can Afford

Before you start shopping for a house, take a good look at your budget. Find out how much you can afford to pay each month, so you look in a price range that fits your finances—and won’t lead to frustration. 

It's important to decide how much you want to spend on a home. Qualifying for a large loan doesn't mean you have to use the maximum loan amount. Buyers who go this route and finance a home they can't necessarily afford tend to have little money left over for things like entertainment, travel, emergencies, or home repairs. If you want to avoid the mistake of looking for homes that are well above your price range, use this affordability calculator to get a better idea of what you can really afford. 

3. Moving Too Fast

When first-time homebuyers find a house they like, they may rush things a little. Rushing the process can cost you later on, says Nick Bush, a Realtor with Keller Williams Realty in Rockville, Maryland.

“The biggest mistake that I see is to not plan far enough ahead for their purchase,” Bush says.

Map out your homebuying timeline at least a year in advance. Keep in mind it can take months — even years — to repair poor credit and save enough for a sizable down payment. Take the time to consider features, price, and location as you look around, it may be easier to find a suitable property as well. The more you learn about the home-buying process, the more you'll build confidence that helps you to make informed decisions.

4. Skipping Home Inspections

The home inspection is an added expense that not every first-time homebuyer might know about and one that some might feel safe forgoing. It may be tempting to skip this step. After all, arranging an inspection requires time, energy, and money. But you may find that the cost of an inspection is the best money you've ever spent. 

It can help you win the bid in a competitive market, but it can become a costly mistake if you find significant damage after you close. Because if the home needs big repairs you can’t see, an inspection helps you negotiate with the current homeowner to have the issues fixed or adjust the price accordingly. It's also a good idea to be present during the inspection. You’ll learn a lot about the house while listening to the inspector and touring the premises.

5. Not Doing Enough Research

Many first-time home buyers may not be aware of the programs that are available. It’s important to do your homework and find which programs are available in the state you are trying to buy a home.  

Look into one of the three government-insured loan programs backed by the Federal Housing Administration (FHA loans), U.S. Department of Veterans Affairs (VA loans), and U.S Department of Agriculture (USDA loans).

6. Overlooking The Extra Costs Of Homeownership

It can be a big surprise to first-time homebuyers that once the keys are yours, you will have additional expenses on top of your monthly mortgage payment. As a new homeowner, there are many other potential expenses to budget for, like property taxes, mortgage insurance, homeowners insurance, hazard insurance, repairs, maintenance and utilities, and more. 

Not having enough cushion in your monthly budget — or a healthy rainy day fund — can quickly put you in the red if you’re not prepared. When determining how much you can afford to pay each month for a home, build these expenses into your budget.

My Advice: Have Fun When Buying Your First Home And Talk To An Expert

Now that you know the mistakes many first-time homebuyers tend to make, you'll be ready to avoid them. Enjoy the special home-buying experience without feeling overwhelmed. Learn how emotions help you make better decisions and have a plan in place when you start home shopping to find a house you love.