I was nervous before I joined the ranks of homeowners last summer. But I had supportive friends and family supporting my wife and I, ready to answer any and all of the questions we had as we navigated the process.
But not everyone is so lucky.
Today, I'm back to help you navigate the home buying process.
Here are the 5 most common first-time home buyer mistakes and how to avoid them.
First-time home buyer mistakes
Nothing about the home buying process is as simple as it should be. The home searching process, finding a lender, and buying your home are all processes that are littered with mistakes.
As such, I'll break these mistakes into these three categories:
Finding a home
Working with a lender
Buying your home
Common mistakes when finding a home
If you want your first home buying process to be as smooth as possible, it is critical that you follow these tips, starting with the home searching process.
1. Not outlining your needs
Too many prospective home buyers just start their home buying process without paying any attention to their needs and wants.
Before you even step foot in a home, it is critically important to outline the needs that your new home must have.
This may include things like:
The size of the lot
The location of the home
The number of bedrooms and bathrooms
You'll also want to outline those items that are wants, nice to haves, but not necessarily required. Most times, you won't get everything on your wants list, but what you can get could be the difference in deciding to buy a home or not.
2. Touring homes randomly
Even when housing inventory on the market is low, there are likely to be one hundred or more homes within a short driving distance of you. All of this selection can quickly become overwhelming without a game plan.
Before you tour, I recommend that you use sites like Zillow, Realtor.com, Redfin, and Trulia.
Take a look at locations, home prices, and then make a decision whether or not you'd like to
The best part about viewing and using online sites like these are that you can easily contact seller agents to arrange for a tour.
3. Making a decision based off emotions
To be fair, emotion should play a role in the home buying process. You don't want to buy a home you don't love, after all. But you do want to make sure that your emotions don't guide the whole process.
Doing so could lead you to fall in love with a home far outside your budget or choose a home that has flashy perks but doesn't meet some of basic needs on your list.
I find that remaining super focused on the home buying process helps a lot here. Do things like:
Only tour homes in your budget and target location
Make a list of your must have and nice to have features
Agree on a budget before you start touring homes
4. Don't be afraid of outdated homes
My wife and I did not buy a fixer upper. But our home is a little outdated in the kitchen and bathrooms, and they'll need to be refreshed at some point. When we first bought the home, we were planning on budgeting to tackle these projects as quickly as possible.
But then something funny happened. We moved in, and we were so happy to be homeowners that the mustard yellow toilet seats and avocado green bathroom walls didn't bother us at all.
In fact, we'd rather save money responsibly over a period of time and get these projects done in the next 5-10 years or so.
For these reasons, I encourage you to be okay with buying outdated homes. They can be a great way to save a bit of money and buy a good amount of house, all while sticking to your budget.
Working with a lender
Even if the home searching process is easier than you think, you're not quite out of the woods yet. Instead, you'll want to focus on avoiding these common lender mistakes.
5. Not getting pre-approved for a mortgage
Before you even begin searching for homes, I recommend that you search for mortgage lenders and begin the mortgage pre-approval process. My wife and I got pre-approved, and it was a great decision. Here's why.
In a competitive real estate market, having a pre-approval allows you to put in offers knowing that you're approved to do so. Not only will this allow you to move more quickly, but it also signals to prospective home sellers that you're serious about buying a home and getting the process done as quickly as possible.
And seeing as how we bought in the competitive real estate market in 2022, it helped us secure our house.
6. Choosing the wrong lender
Speaking of mortgage lenders, not all banks and mortgage lenders are made the same. Some offer different fee structures, interest rates, and customer experiences. And while too many Americans just work with the first mortgage lender they reach out to, I recommend that you research and get preapproved with multiple lenders.
This will give you an opportunity to get the best interest rate possible and evaluate the customer service experience with each before you need to make a decision on who to work with.
If you're looking to really evaluate a variety of lenders, it may be a good idea for you to consider a mix of national and local lenders. And while I ultimately believe in picking the lowest interest rate you can find, you may find it helpful to see how the experience is different between national and local lenders.
7. Picking the wrong mortgage
Another one of the most common first-time home buyer mistakes is choosing the wrong home loan for your situation. Again, millions of home buyers don't even realize that there are multiple home financing options available.
First-time buyers in particular may be eligible for these types of mortgages:
Conventional (fixed and adjustable rate)
FHA
VA
USDA
Jumbo
Always conduct your own research and work with a professional to help you decide what your best options may be.
Buying your home
Even once you've completed your home search and picked a lender, there are still a couple of common mistakes that you'll want to make sure to avoid however possible.
8. Skipping out on a home inspection
During times with competitive real estate markets, it is common for home buyers to waive their right to a home inspection prior to closing. This is exceptionally risky and never something that I would recommend.
Unless you're a true professional, there is no way for you to know whether the foundation is sturdy, your roof is adequate, and whether your electrical or plumbing is littered with red flags.
In too many instances, the most expensive repairs occur as a result of problems or mistakes that you can't see with an untrained eye. It is always best to have a professional write you a report before you move forward.
Plus, if the inspection does turn up something wrong with the home, particularly if it is something major, you may have leverage to renegotiate the home's sale price.
9. Forgetting about closing costs
My final word of advice to first-time home buyers is to remember to budget for closing costs as you plan to buy a home. In the haste of the home buying process, it can far too easy to forget about your closing costs, which could be up to $10,000 - or more - in certain parts of the country.
It is critical that you remember to include these expenses in your plan as you begin to search for and ultimately purchase a home.
Avoid first-time home buyer mistakes
Beyond these tips, I have a number of other resources designed to help you avoid many of the most common mistakes that first-time homeowners tend to make when purchasing their homes.
For example, did you know that doctors, lawyers, and other professionals may be eligible for special physician loan or lawyer mortgage loans? Depending on your financial situation and the amount of student loan debt you have, these special mortgage loans may help you to buy a home sooner than you ever thought possible.
Other resources that may help include our lender guides, both for physician and conventional mortgages:
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