The six most common homebuying mistakes you can avoid
First-time homebuyers get serious when they go from looking at homes to making an offer. Shopping for a home is exciting, but things get real when it's time to actually buy one.
Add to that the uncertainty around the economy and rising mortgage rates and home prices, and it can be downright anxiety-inducing. First-time homebuyers may worry that they’ll make a mistake during the mortgage process and mess up their finances.
Luckily, this article can help you identify and avoid the common mistakes beginners often make—and how to avoid them. Also, if you're ready, you can start the homebuying process by applying for a mortgage pre-approval.
1. Going it alone
With easy access to helpful tools and technology, you may prefer to handle the homebuying process yourself. This includes finding a home online and securing a mortgage. However, if you're a first-time homebuyer, you may not know the mistakes you could make, even though they’re common.
Working with local experts—like real estate agents, loan officers, and other professionals—increases your chances of making the best choice.
2. Trying to time the housing market
When mortgage rates rise after being low, it's common to think, "I'll wait for rates to go down again." The problem is, that doesn’t always happen, at least in the timeline you were thinking.
This is obvious when looking back at rates over the last few years. In 2020-2021, interest rates were consistently below 3%. Even in August 2022, homebuyers would have considered a 5.55% rate disappointing. Of course, now with mortgage rates hovering around 8%, a 5.55% rate seems favorable in retrospect.*
The fact is, the housing market is simply too complex to predict the best time to buy a house. That’s why the best time to buy a home often comes down to when you’re ready to buy a home, not when the market says, “it’s time.”
3. Skipping the mortgage pre-approval
Many homebuyers start by looking at house listings to see what options are available. Using a mortgage calculator can give you an idea of what you can afford. However, this estimate is not confirmed by a lender, which may cause disappointment if you discover a house you adore but you lack the necessary financing.
That’s why it’s so important to get pre-approved first, before you start looking at houses. When you go to an open house with a pre-approval letter, you'll know how much you can afford. And the seller will know that you mean business.
4. Neglecting your credit score
Lenders consider various factors, but your credit score** is crucial when determining your mortgage terms. This is essentially a grade given to you by the three credit bureaus based on your credit history. The higher your score, the more trustworthy you appear to lenders.
Before you decide to start your homebuying journey, you should check your credit score and make sure it’s in good condition. How you handle your money affects your credit score.
If you haven't done well, it will show. But the good news is that there are actions you can take to improve your score. Talk with a credit counselor to find out what you need to do.
5. Not doing your due diligence on the home
A big mistake is buying a home that isn't worth the price you're paying. It's difficult to thoroughly inspect the house and make sure it meets your expectations when there are many other interested buyers. The presence of competition makes it challenging to allocate enough time for a careful evaluation. You're too concerned someone else might get the home first, and you don't check if the home is worth it.
Hopefully you’ll slow down enough to at least see the house before putting an offer in. Don’t trust the images in the home’s listing!
The pictures are often staged and chosen to put the home in the most flattering light. If you can't go see it, ask a trusted agent or friend to visit the house for you. They can take pictures and carefully examine everything.
Why a home inspection is important
Even if you’ve been able to see the house in person and judge for yourself that it is the right home for you, you also should have a home inspector tour the home. While skipping inspection is common during the negotiation stage a professional inspection provides peace of mind and ensures that all important parts of the home are thoroughly checked.
A home inspector looks at the big things in your home that you can't readily fix, like the water heater, furnace, and foundation. Even if you consider yourself extremely handy, these are parts of your home you don’t want to be forced to repair or replace.
6. Leverage your network
If you find yourself making one of these mistakes, don’t worry. They’re common for a reason. You can use the advice in this article to reverse course and still make the purchase feeling good about your decision.
The most important thing you can do is to share your homebuying experience with others. You can rely on friends, family, and experienced professionals who have gone through this situation multiple times. To avoid mistakes, it's helpful to listen to advice from local experts. This is especially true for a loan officer who knows your market well.
How to start your homebuying journey
If you're ready to start the homebuying process, our team is ready to help! Begin your path forward with a mortgage pre-approval. You can apply online in as few as 10 minutes.
Getting pre-approved demonstrates to sellers and agents that you are committed to purchasing a home. It also provides an indication of the amount of money you are likely to be approved for.
Avoid the common mistakes, get pre-approved, and you'll find your new home before you know it!
* Not advertised rates from Proper Rate.
**Proper Rate IS NOT A CREDIT REPAIR COMPANY, CREDIT REPORTING AGENCY, BROKER OR ADVISOR. You acknowledge that Proper Rate is not a credit repair company or similarly regulated organization under applicable laws, and does not provide credit repair services. Where available, recommendations, tips and education materials are provided to you at no additional charge, and for educational purposes only. The services are intended to provide you with general information and assist you with identifying your options. The information is provided only to enable you to make your own choices about your personal finance, and is not intended to provide, legal, tax or financial advice. We do not provide any services to repair or improve your credit profile or score, nor do we provide any representation that the information we provide will actually repair or improve your profile. Consult the services of a competent professional when you need any type of assistance. You acknowledge that Proper Rate is not a “consumer reporting agency” as that term is defined in the Fair Credit Reporting Act as amended.
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply, contact Proper Rate for current rates and for more information.