12 Mistakes To Avoid When Buying Your First House

Purchasing your first home is an exciting milestone, but the process can be daunting if you don’t know what to expect. While buying a house is a joyful event, it’s also a huge financial decision that requires care and consideration. Making the wrong moves could cost you big time by resulting in a higher interest rate, monthly payments and other unnecessary expenses.

As first-time buyers, we made our fair share of mistakes that ended up costing us money. Through trial and error, we learned how to avoid missteps and navigate the home buying process smoothly. Whether you’re just starting your research or are under contract on your first home, keep reading to learn about 12 common mistakes to avoid on your home buying journey.

1. Not Checking Your Credit Score

Your credit score plays a huge role in the mortgage process, as lenders use it to determine your eligibility for a home loan and interest rate. Before you apply for preapproval, check your credit score and report to identify any issues that may hurt your rate If your score is low, take the time to improve it by paying down debts and disputing errors

Monitoring your credit is also crucial after you apply for a mortgage, as any new accounts or missed payments before closing could change your rate. Avoid any credit impacts during the home buying process.

2. Not Saving Enough for Down Payment and Closing Costs

Many first-time buyers underestimate the upfront cash needed to purchase a home. Along with your down payment, you’ll need funds on hand for closing costs like origination fees, appraisal fees, title fees and prepaid items like homeowners insurance and property taxes.

Crunch the numbers beforehand so you have enough in savings to cover your down payment and closing costs. While tempting, don’t spend all your cash on the down payment alone.

3. Ignoring First-Time Homebuyer Programs

Special programs for first-time buyers can provide down payment assistance, reduced interest rates and other perks to help you afford a home. Yet many buyers don’t take advantage of these resources. Do your research to see if you qualify for local, state or federal first-time buyer programs.

For example, state housing finance agencies offer down payment assistance loans with favorable terms. Your lender may also have special first-time buyer products.

4. Not Shopping Around for the Best Mortgage

Don’t go with the first lender you talk to. Comparing multiple lenders is the only way to find the best home loan for your situation. Apply with several lenders and compare interest rates, fees and loan options side by side.

Working with a mortgage broker can streamline the process since they have access to wholesale lender rates you can’t find on your own. But still get quotes from banks and credit unions as well.

5. Thinking You Need 20% Down

Although 20% down provides the best loan terms, you can get approved with far less. Conventional loans allow down payments as low as 3% with mortgage insurance. Government-backed FHA, VA and USDA loans offer ultra low down payments or even 0% down for qualified buyers.

Don’t make the mistake of depleting your savings just to hit 20% down. Look at all your financing options to find the right loan program for your budget and financial goals.

6. Not Getting Preapproved

Preapproval from a lender confirms how much home you can afford and shows sellers you’re a serious buyer. But many first-timers skip this step and start looking at homes first. You could end up disappointed if you fall in love with a home you can’t actually afford.

Talk to lenders and get preapproved before house hunting so you know your true price range. Being preapproved also makes your offer stronger in the seller’s eyes.

7. Waiving the Home Inspection

Even in a competitive market, resist the urge to forgo the home inspection. This evaluation from a licensed inspector identifies issues with the home’s systems and structure. If repairs are needed, you can renegotiate with the seller, often successfully.

Without an inspection, you won’t know about lurking problems until after you close. Get an inspection so you can make educated decisions about purchasing the property.

8. Not Asking For Closing Cost Help

Some buyers are shy about asking for closing cost assistance, not knowing it’s common in real estate transactions. Sellers can provide closing cost help by chipping in on costs or lowering the price.

If your down payment funds are lacking, politely ask if the seller can credit you a portion of the closing costs at closing. Many will agree to help get the deal done.

9. Skipping the Homeowners Insurance Shopping

Failing to compare homeowners insurance rates is an expensive mistake. Premiums can vary drastically between insurers for the same coverage. Spending time shopping could save you several hundred dollars per year.

Get quotes from insurers and go with the one offering the best rate for your situation. Ask about bundling policies and other discounts to maximize savings.

10. Not Maintaining Your Finances Before Closing

Lenders recheck your income, assets, debts and credit right before closing. Any major changes could cause them to deny your mortgage at the last minute. Avoid any credit impacts, job changes or large purchases until you have the keys in hand. Keep your finances steady through closing.

11. Making a Lowball Offer

While you want the best deal, an excessively low offer can turn off sellers and make them ignore your bid altogether. Your real estate agent can advise you on making a competitive offer based on comparables and the local market.

Submit an offer that has a reasonable chance of being accepted. Go low but not unrealistically so. Being too aggressive could cost you the home.

12. Not Inspecting the Home Yourself Before Making an Offer

Some first-timers bid on homes sight unseen or after a quick virtual tour. But nothing compares to walking through a home yourself to assess its condition, layout and feel. Never make an offer on a home you haven’t toured in person first.

Schedule a showing so you can inspect the property thoroughly and determine if it fits your needs before moving forward. Don’t let excitement push you into making a mistake.

Avoiding these common first-timer missteps will empower you to navigate the home buying process smoothly. Being prepared and informed is key to purchasing your first home successfully. With a little caution, your home buying journey will be full of joy rather than stress or regret.