4 Biggest First-Time Home Buyer Mistakes (And How To Avoid Them)

avoid these first-time homebuyer mistakes

Being a first-time home buyer is an exciting moment in your life. But it also comes with its fair share of hurdles and learning opportunities. An excellent way to keep the magic alive—from the first open house through move-in day—is to prepare! By entering the market with a plan, realistic budget, and awareness of costs, you’ll avoid the first-time home buyer mistakes that can derail your home ownership plans. Knowledge is power, so keep reading!

First-Time Home Buyer Mistake #1: Neglecting To Improve Credit Scores & Debt

Lenders look at borrowers’ credit scores and debt-to-income ratios when deciding whether to approve their loans. Improving those metrics can be a game changer when securing a loan with a reasonable interest rate. We’ve written in the past about how you can improve your score. Still, a good rule of thumb is to try and start paying existing balances until they’re below 30% of your credit limit. 

One common first-time homebuyer mistake is being so eager to buy a home that they’re unwilling to wait for their credit score or DTI to improve. And, yes, it will take time to increase your score and pay off debt. But your patience will pay off (literally) in the end and save you thousands over the life of your loan. Be diligent and channel your inner zen. You’ve got this!

First-Time Home Buyer Mistake #2: Shopping Before Evaluating Finances & Securing A Loan

Okay, we get this one. Shopping is fun. Financial planning is not fun. But we can’t stress enough how crucial it is to thoroughly assess your finances before ripping a “Sold” sign out of someone’s lawn. Talk with a mortgage lender about your unique financial situation. Doing so will clarify your budget and help you figure out which loans match your needs. Focus on lowering your monthly rate and not on the loan total. Taking this step with help you feel more prepared to enter the market

Once your financial situation is clear, avoid the typical first-time home buyer mistake of shopping for a house without getting pre-approved for a mortgage. In a seller’s market, there is no shortage of buyers, so most people won’t consider you a serious buyer unless you have a completely underwritten pre-approval. Securing a loan first also allows you to lock in a decent rate and saves you shopping time now that you’ll only be looking at homes you can afford.

First-Time Home Buyer Mistake #3: Prioritizing The House Over Location

With the market hot and housing stock down, we understand buyers want to close on the perfect home when they find it, regardless of the location. If you relate, take a deep breath and back away from the house. This kind of tunnel vision is a first-time home buyer mistake that prevents you from seeing the big picture.

You can renovate a house, but you can’t renovate your neighborhood or community! So, drive around and list areas that fit your lifestyle or have an excellent school system. Be open-minded about looking for the most affordable home in great locations and visit those places at different times of the day. Remember: there’s no point in having a beautiful house in the wrong place.

First-Time Home Buyer Mistake #4: Overlooking Fees & Costs 

Another unpopular topic is unforeseen costs! Okay, closing costs aren’t invisible; they are listed in the closing disclosure document. But they’re often overlooked when first-time homebuyers are budgeting. Put simply, closing costs are the price of all the bureaucratic paperwork associated with closing on a home. Closing costs tend to be around 3-6% of a home’s purchase price and cover numerous charges and fees. However, this is one of those first-time home buyer mistakes that can be managed by negotiating lower costs and shopping around.

You’ll also need to schedule a professional home inspector as soon as your offer has been inspected. While a home inspection isn’t required, it’s a proactive way to avoid buying a money-pit. Don’t forget to factor in monthly utilities, repairs, and yearly maintenance. It’s tempting to shrug off the reality of these day-to-day costs. The average homeowner pays around $2,000 yearly for routine maintenance. 

Closing costs, home inspections and repairs may feel abstract now, but they will soon be your responsibility, and dodging them will adversely affect the value of your home. Set aside money in a separate account monthly to ensure you’ll be able to deal with these annoyances as they occur. This way, you can keep them minor before they get major.

Take The First Step. Get Approved!

While buying a home has its challenges, knowing what they are and how to eliminate them is half the battle, and you don’t have to do it alone.  Contact Hixon to meet with one of our expert mortgage loan officers. Their knowledge and experience will help you avoid the pitfalls of typical first-time home buyer mistakes so that you can thrive in your new home!


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