8 First-Time Homebuyer Mistakes to Avoid at All Costs


When I bought my first (and probably last) home, I had no real idea of what I was doing. But I knew I needed to do it right. After all, a home purchase is one of the biggest financial commitments you can make. You want to get it right.

Before closing the deal on my home, I tried to research as much as I could. I still made a few mistakes, and I learned a few things along the way. As you prepare to be a first-time homebuyer, it can help to see the pitfalls before you get to them. Here are eight mistakes to avoid as you shop for your first home.

1. Buying more home than you can afford

When I first started shopping around for mortgages, I was surprised at how much some lenders were willing to let us borrow. Soon, I was spinning fantasies about a massive house on a hill in the ritzy part of town.

As a first-time homebuyer, it’s easy to let those big numbers go to your head. You try to convince yourself that you really can make it work. However, that could be a mistake. Buying a home requires that you do a bit of research ahead of time.

“It pays to do your homework,” said Kevin Torres, a mortgage product specialist at Navy Federal Credit Union. “You need to understand what your budget is and what mortgage products best fit your budget short- and long-term.”

Look at your situation, and figure out what you’re comfortable with. Then use a mortgage calculator to run different scenarios to get an idea of what kind of home you can truly afford.

2. Failing to check your credit before you start

Before someone lends you hundreds of thousands of dollars to buy a home, they want to be reasonably sure you’re going to pay it back. That means a credit check.

Torres recommended getting a copy of your credit report before you start. By law, credit reporting agencies have to provide you with one free credit report a year. Go to AnnualCreditReport.com for your free copy.

Review your report for inaccuracies, and fix those you find. If there are negative items, like collections or judgments on your report, Torres said, you need to be prepared to explain the situation to your lender. This might include a written statement laying out the situation and any extenuating circumstances.

My credit report had a couple of misreported items. There were double-reported student loans and credit cards, making it look like I had more debt than I did. I needed to address those issues before I could move forward with my home purchase. By working with the lender and contacting the credit reporting agencies, we were able to clear up the discrepancies and close on the home.

3. Not getting pre-approved

Most sellers aren’t going to take it on faith that you will just come through with the goods. A seller (and their real estate agent) wants to know you aren’t wasting their time.

“I see a lot of listings stating that any offer submitted without a pre-approval letter will not be accepted,” said Mindy Jensen, a real estate agent and the community manager at popular real estate website Bigger Pockets.

Pre-approval is different from pre-qualification. With a pre-qualification, the lender gives you a ballpark figure of what you might be able to borrow, pending a deeper dive into your credit and financial situation. When you’re pre-approved, the lender pretty much commits to a loan amount. The pre-approval process is more intense, but when you’re finished, you know exactly where you stand.

“Most markets are red-hot right now,” said Jensen. “Taking the time to get pre-approved from a lender can be the difference in your offer being accepted or rejected.”

4. Choosing the wrong real estate agent

Not every agent works well with first-time homebuyers, according to Jensen. And it’s vital that you find an agent you are comfortable with and that you trust, she said. Get a feel for how well your real estate agent knows the market and the home buying process. You want someone who can explain the ins and outs to a noob like you, but who doesn’t talk down to you while doing it.

“Interview several agents and make sure they communicate in the style you want, and are comfortable with answering a ton of questions,” said Jensen. Your agent should contact you the way you’d like to be contacted, whether that’s a phone call, email, or text.

Jensen also suggested looking for someone with a “buyer’s agent” designation. Buyer’s agents are legally required to be on the side of the homebuyer. A listing agent, on the other hand, has a duty to help the seller get the best price. Look for an agent who will be your advocate and can guide you through the transaction.

5. Thinking everything has to be perfect

It’s nice to believe that, as a first-time homebuyer, you will purchase your dream home. However, said Jensen, that’s not likely to be the case. “You are going to waste a lot of time looking at houses if you want everything to be perfect,” she said.

Instead, realize that you might have to settle in some areas — especially if your budget constrains you. Jensen said to focus on price and layout. Think about your needs as a family.

When I bought, I considered that I often had friends and family over for meals and other events. Even though it would have been nice to have a larger master bedroom and a double sink in the master bathroom, I realized that large common areas were more important. In the end, I chose a home with an open layout offering plenty of room to create memories with our guests. It wasn’t a perfect house, but it maximized its limited space.

6. Not getting a home inspection

As a first-time homebuyer, it’s easy to get discouraged as the costs keep piling on. “Some buyers look at the $400-to-$800 inspection price tag and think they don’t need one,” said Jensen. “Yes, you really do need one.”

She pointed out that, while you might have to draw the line somewhere when it comes to homebuying expenses, the inspection isn’t the place to make a stand.

“A home inspection gives you a snapshot of the condition of the home,” Jensen said. “The inspector will find things you would never even know to look for, including hidden leaks, recalled electrical panels, poor landscape grading, and a host of other things you never even heard of.”

With the home inspection in hand, you can request that some items be addressed by the seller before you close. If the issues are large enough, the home inspection can also be an excuse to back out of a deal before you find yourself trapped in a money pit.

7. Making a large purchase before you close on your loan

You’ve found your home, the lender has given you the go-ahead, and now you just need to wait for the closing date. It can take weeks to close on a home, so you might be tempted to make a few purchases in anticipation. Maybe put a new couch on the credit card. Perhaps order a new bedroom set.

Making these decisions before the loan closes can be a big mistake, Torres said. Your lender is likely to do another check of your finances before the closing date. If a large purchase impacts your credit situation, or if it looks like you’re already getting in over your head, the lender may decide to scuttle the deal.

“You want to make sure you present your best financial selfie to a lender,” said Torres. “Don’t hurt your credit by getting fresh debt.”

8. Not asking enough questions

Finally, Jensen said, a lot of first-time buyers hesitate to ask questions. This can be a mistake, though. While it might feel embarrassing to display your ignorance, the truth is that you do need to make sure you understand everything that’s happening.

“This stuff is complicated, and everyone involved uses language that isn’t familiar to you,” said Jensen. “Ask them to explain it. Ask questions and keep asking until you understand exactly what’s happening.”

Be the best first-time homebuyer you can be

It’s always difficult to do something for the first time. However, if you lay the groundwork ahead of time and focus on asking questions every step of the way, you should make it through your first-time homebuyer experience relatively unscathed.

As Torres said, “The more prepared you are at the start of the homebuying process, the less stressed and more confident you will be in buying your first home.”

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