First-Time Homebuyer? 7 Mistakes to Avoid

Buying your first home is an exciting milestone, but the journey can feel overwhelming at times. However, the right tips for first-time homebuyers can guide you to make smart decisions throughout the homebuying process.

There are many common pitfalls for first-time homebuyers. Learning about them can help you avoid making the same mistakes and make your path to homeownership smoother. 

Mistake #1: Not Getting Pre-Approved For a Home Loan

The Challenge

Many people begin the homebuying process by searching for homes before knowing their budget. Getting pre-approved makes you a more prepared buyer from day one.

Why Having a Pre-Approved Loan May Help You

• It will show you exactly how much you can afford based on your real income and debts
• It can make your offers stronger when competing with other buyers
• It sets accurate expectations and keeps you focused on realistic options
• It may make your mortgage loan closing process faster once you find your home  

Your Action Plan

• Get your paperwork ready (most recent pay stubs, tax returns, and bank statements)
• Shop with multiple lenders to find the best rates and terms you qualify for
• Apply for pre-approved loans with 2-3 trusted lenders
• Check that your pre-approved loan offer doesn’t have errors relating to the information you provided the lender

Mistake #2: Forgetting About Extra Costs Beyond the Price of the Home

The Hidden Expenses

The home's price is just the starting point. There are other fees and recurring costs that may affect your actual monthly payment. Plan for these upfront so there are no surprises.

Extra Costs You Need to Plan For:

• Closing costs (lender and third-party fees)
• Property taxes (amount varies based on different factors like the home’s value or location)
• Home insurance
• Private mortgage insurance (PMI) if you make a down payment of less than 20%
• Homeowners Association (HOA) fees for condos or neighborhoods with an association
• Maintenance and repairs

Budget Planning Checklist

• Look up property tax rates where you want to buy
• Get insurance quotes for houses you're thinking about buying
• Add PMI costs to your budget if needed
• Budget for maintenance and repairs
• Keep extra money aside for unexpected expenses
• Use an online mortgage calculator to help you budget

Mistake #3: Using All Your Savings for the Down Payment

The Problem with Spending Everything

A down payment will reduce your monthly mortgage payment. However, you'll want to consider expenses like moving, unexpected repairs, furniture etc. when deciding how much of a down payment you can make.

Homeownership Costs

• 3–6 months of living expenses
• Moving costs, like movers, packing supplies, moving truck, and cleaning services
• Initial move-in repairs and upgrades
• New furniture and fixtures
• Connection and activation fees for utilities like electricity, water, trash, and gas

Emergency Money Checklist

• Set aside an emergency fund to offset unexpected expenses
• Explore lower down payment options that preserve some savings
• Look for first-time homebuyer programs that help with down payments
• Budget for moving and immediate house expenses
• Research the potential tax penalties before dipping into your retirement 

Mistake #4: Not Learning About Different Mortgage Types

Prepare to Talk to Lenders

Becoming familiar with the different loan types available (at least in a general sense) before working with a lender may help you know what questions to ask.

Know the Basics

• Fixed vs. Adjustable-Rate Mortgages
• Conventional vs. FHA Loan
• 15-Year Loan vs. 30-Year Loan

Mortgage Shopping Checklist

• Compare rates from several lenders
• Make sure you understand all the loan rules
• Ask about paying points to get a lower rate and if it’s right for you
• Look at closing costs and lender fees
• Ask about special programs for first-time buyers

Mistake #5: Not Taking Care of Your Credit Score

How Your Credit Score Affects Your Mortgage

Your credit score is an important factor that determines if you'll be approved for a home loan and what your interest rate will be. Even small improvements in your score may save you a significant amount over the life of the loan.

Credit Score Ranges and What They Mean

• 740+: You get the best rates available
• 680-739: Good rates with most lenders
• 620-679: Higher rates and fewer choices
• Below 620: Fewer options and much higher costs

Credit Improvement Checklist

• Check your credit reports for mistakes
• Pay down credit card balances
• Don't close old credit cards
• Pay all bills on time
• Don't apply for new lines of credit while applying for a home loan

Mistake #6: Significant Financial Changes While Applying for a Home Loan

Timing Matters

Lenders check your finances several times during the approval process. New debts or credit checks and financial shifts can change how much you can afford and might jeopardize your mortgage approval.

Staying on Track Checklist

• Wait to make significant financial purchases until after you close on your house
• Keep the same job to show income reliability
• Pay all your bills on time
• Talk to your lender before making any necessary significant financial purchases
• Don't move large amounts of money between bank accounts unnecessarily

Mistake #7: Skipping the Home Inspection

What May Happen When You Skip This Step

Home inspections usually cost $300-$700 but can be more depending on the size of the home and if there are specialized inspections needed. The purpose of an inspection is to find costly problems before the sale goes through, allowing you to negotiate with the seller. Skipping this step to save a little money can lead to expensive surprises after you own the house.

What Inspectors Look For

Professional inspectors check the foundation, electrical wiring, plumbing, heating and cooling systems, and other important parts of the house. They report any safety problems, building code violations, and necessary repairs.

Inspection Process Checklist

• Hire a qualified inspector with a license
• Go to the inspection so you can ask questions
• Read the inspection report carefully
• Ask the seller to fix problems or discount the selling price
• Get special inspections for older homes or specific concerns

Your Next Steps to Homeownership

The homebuying process can feel overwhelming. However, you aren’t alone in the process and it’s a learning experience. Taking your time and preparing well usually works out better than rushing through this important process. These first-time homebuyer tips will help you make smart decisions when buying your first home.

Ready to look at mortgage options? We have a team dedicated to helping you navigate the homebuying process. Learn about what we offer and talk with experienced mortgage professionals who understand what first-time buyers need.

Learn more about planning to buy your first home.

---

 

Robert Hernandez Sr. Real Estate Underwriter

About the Author With more than 20 years of experience in mortgage lending and financial services, Robert Hernandez has helped countless individuals move closer to their dream of homeownership. Over the years, he has worked for major institutions like Wells Fargo and Bank of America in roles ranging from loan officer to processor to underwriter. That experience gives him a well-rounded understanding of what borrowers need at every stage of the lending process. Robert’s goal is simple: to make the homebuying journey easier to understand and less stressful. He takes the time to walk members through their options, explain how lending decisions work, and help them prepare financially for long-term success. What keeps Robert passionate about this work is seeing members achieve milestones they once thought were out of reach. For him, homeownership is more than a loan approval — it’s a foundation for stability, opportunity, and long-term financial confidence. Outside of work, Robert enjoys spending time outdoors, spending time with his family, and staying connected to his community.

About the Author Robert Hernandez Sr. Real Estate Underwriter With more than 20 years of experience in mortgage lending and financial services, Robert Hernandez has helped countless individuals move closer to their dream of homeownership. Over the years, he has worked for major institutions like Wells Fargo and Bank of America in roles ranging from loan officer to processor to underwriter. That experience gives him a well-rounded understanding of what borrowers need at every stage of the lending process. Robert’s goal is simple: to make the homebuying journey easier to understand and less stressful. He takes the time to walk members through their options, explain how lending decisions work, and help them prepare financially for long-term success. What keeps Robert passionate about this work is seeing members achieve milestones they once thought were out of reach. For him, homeownership is more than a loan approval — it’s a foundation for stability, opportunity, and long-term financial confidence. Outside of work, Robert enjoys spending time outdoors, spending time with his family, and staying connected to his community.