12 First-Time Home Buyer Mistakes and How to Avoid Them

It’s OK to have a learning curve. Here are some common errors and how to steer clear of them.
Abby Badach Doyle
Holden Lewis
By Holden Lewis and  Abby Badach Doyle 
Updated
Edited by Johanna Arnone

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Go easy on yourself: All first-time homebuyers face some unknowns. Friends and family might offer advice, but it may not be relevant to the challenges of today’s housing market.

If you’re trying to identify what you don’t know, you’re already off to a smart start. Here are 12 common mistakes that first-time home buyers make — and what to do instead.

1. Not knowing how much house you can afford

Without first figuring out how much house you can afford, you might waste time. You could end up looking at houses that you can't afford yet or visiting homes below your price range that don’t meet your needs.

For many first-time buyers, the goal is to buy a house and get a loan with a monthly payment that fits comfortably into your overall household budget. If you aren’t sure, sometimes it's a good idea to aim low.

How to avoid this mistake: Use a mortgage affordability calculator to help you know what price range is affordable, what's a stretch and what's aggressive.

2. Shopping for a house before a mortgage

It’s more fun to look at homes than it is to talk about your finances with a lender. So that’s what some first-time home buyers do: They start walking through houses for sale but put off the mortgage preapproval. When a great place pops up, however, it’s wise to have that preapproval in hand; that way, your offer is as strong as possible.

How to avoid this mistake: Talk to a mortgage professional about getting preapproved for a home loan before you start to seriously shop for a place. The preapproval process involves a review of your income and expenses, and it can make your bid more competitive because you’ll be able to show sellers that you can back up your offer.

3. Getting just one quote for mortgage rates

Shopping for a mortgage is like shopping for a car or any other expensive item: It pays to compare offers. Mortgage interest rates vary from lender to lender, and so do fees such as closing costs and discount points.

But according to Fannie Mae’s National Housing Survey, about a third of homebuyers get only one quote from a mortgage lender.

How to avoid this mistake: Apply with multiple mortgage lenders for preapproval. A typical borrower could save $100 per month (or more) by comparing interest rates and going with the cheapest option, say researchers from the the Consumer Financial Protection Bureau. All mortgage applications made within a 45-day window will count as just one credit inquiry.

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