5 mistakes first-time homebuyers make (and how to avoid them)

A few things you should know to be a smart homebuyer. Want more? Try our new audio course ‘Buy Your First Home’ and learn every step of the homebuying process from Knowable’s team of experts.

Buying your first home is incredibly exciting. But there are some common mistakes many first-time homebuyers make. Knowable’s Buy Your First Home audio course features top experts sharing their tips on how to navigate the homebuying process. Here are some of the pitfalls they say you should avoid.

1. Not annualizing expenses when determining your budget

Before you even start looking for a house, you should determine what your budget is — and be realistic about what you can comfortably afford each month. One big mistake? Forgetting about irregular expenses, or expenses that don’t occur monthly. Think car insurance paid upfront, car inspections, credit card annual fees, vet bills, hair cuts, and dental expenses. Add up what you realistically spend on things like this over the course of a year and divide it by 12 so you have a clearer picture of your monthly expenses and won’t risk under budgeting for them.

2. Refusing to consider different neighborhoods

You might have your heart set on that trendy little neighborhood with your favorite cafe, or the one that has the perfect school system for your child. While it’s great to have your research done on where you want to live, along with a list of priorities and deal breakers, it’s worth keeping an open mind, especially if you can get more for your money elsewhere. Be open to suggestions from your real estate agent, who should have more in-depth knowledge about a variety of neighborhoods you might not have considered.

“A buyer can start a process and think that there is something that they want, and then they end up with a completely different house in a completely different neighborhood with completely different criteria,” says real estate agent Anee Yoo. “A lot of people start out to say… I want to walk to coffee…They might find out that [they] never went to coffee. Like [they] didn’t really need that.”

3. Judging a book by its cover

The house you’re thinking about buying has a perfectly manicured front yard, is beautifully furnished and tidy on the inside, and you can immediately see yourself living that catalog life. It might even be new construction — but there could still be issues lurking. Don’t skimp on the home inspection, where an expert will go through and check the guts of the house for any red flags.

“If it is new construction, you would expect that everything’s going to be done right and everything’s going to be in good condition and everything is going to be ready for somebody to move in. That’s not the case,” says Lee Sellick, who has spent 25 years as a home inspector.

“By the time I’m done, [homebuyers] have a more realistic view of what condition the house is truly in,” Sellick adds.

4. Making a big purchase or life change after you’re approved by the lender

You’ve found your dream home, you’ve got your finances on point, and you’ve even been approved by the lender. Time to go on a shopping spree to celebrate? If you’re tempted, don’t do it, cautions Mandi Miller, a senior escrow officer with over 25 years of experience.

“The most important thing is that you don’t change anything once that lender’s locked you in and got you approved,” she says. She’s seen people run out and get store credit cards to take advantage of discounts or even decide to change jobs at this time. That can end up jeopardizing your loan. And no loan can mean no home.

“It changes everything because of a process called underwriting,” she explains. “This happens after you submit your application to your lender — when the bank vets your finances to make absolutely sure you can pay your proposed mortgage payments. Making a large purchase will harm your debt-to-income ratio, so it’s best to avoid buying new furniture or changing jobs until after underwriting is complete.”

5. Trying to time the market perfectly.

Everyone wants to buy low and sell high. But there are so many other factors in your life, and you shouldn’t get completely caught up in timing the market — because you might end up missing out.

“Many people [get] so caught up in ‘I’m entitled to own a home. It’s my right to own a home. And it’s supposed to appreciate. I’m supposed to be able to flip it. I’m going to be a millionaire now,” says mortgage banker Tammy Wittren. “It’s like buying a stock. You can’t time the market perfectly…And I think those that are waiting are losing out…You just buy and you move forward and you start to pay the thing off and you start to make better financial decisions. And in five years, you look back and your home is probably appreciated.”