Key takeaways:
- Preparation is everything: Strong financial health sets the foundation for a successful purchase.
- Know your priorities: Keep your must-haves clear, and don’t let emotions or cosmetic details stray you from what matters.
- Lean on trusted experts: A great real estate agent, lender, and the right loan choice are key.
When it comes to buying a home, people tend to make the same mistakes over and over. The problem is, the repercussions can last for years. Skipping the home inspection or even small oversights can delay the closing date or have long-term consequences.
In this Redfin guide, we’ll walk through what not to do before buying a house and steps you can take to be more prepared. Whether you’re purchasing a home in Novato, CA or Long Island, NY, avoiding these common mistakes can help you navigate the homebuying experience with ease. Let’s get started.
In this article:
- What not to do when preparing financially
- What not to do when securing a mortgage
- What not to do when finding a home
- What not to do when making a decision
- Homebuying for success
- The bottom line
Having a strong financial foundation
1. Don’t ignore your credit history
Your credit history impacts mortgage eligibility and the interest rate you’ll receive. A strong credit profile signals to lenders that you’re a reliable borrower, leading to lower interest rates and saving you thousands over the life of the loan.
What to do instead:
Before applying for a mortgage, review your credit report. Search for any errors such as accounts you don’t recognize or incorrect payment statuses, and dispute inaccuracies early on. Even minor errors can negatively impact your credit score.
2. Don’t miss a payment
When planning to buy a home, consistent on-time payments are essential. Even one missed payment can lower your credit score and raise red flags for lenders. If you’re still paying another mortgage, missing a payment will make you ineligible for a loan for at least a year for most lenders.
What to do instead:
You may want to set up automatic payments for bills including credit cards, student loans, car payments, and utilities. Regardless, make all your payments on time so you don’t get disqualified and experience delays in the homebuying process.
3. Don’t max out your credit card debt
Maxing out your credit cards is one of the biggest mistakes you can make before closing. Credit utilization is how much credit you’re using compared to your limit. For example, if you have a credit card with a $10,000 limit and you have a $2,500 balance, your credit utilization is 25%. This ratio significantly impacts your FICO score, and can lead to a higher interest rate on your loan.
What to do instead:
Before applying for a loan, aim to keep your credit utilization below 30%, ideally around 10%. If your credit utilization is too high, pay down existing balances and avoid bigger purchases with your cards.
4. Don’t make large purchases using debt
Taking on new debt, like car loans, furniture, or even cosigning loans can impact your ability to qualify for a mortgage. Larger purchases can increase your debt-to-income (DTI) ratio, a key factor lenders use to assess how much house you can afford.
What to do instead:
Before buying a home, hold off on any large credit-based purchases. Even if you can afford the payments, adding new debt may reduce your loan approval or lead to higher interest rates. Instead, focus on keeping your financial profile as steady and low-risk as possible.
5. Don’t drain your savings account
While it’s tempting to put every dollar toward your down payment, it’s a mistake to empty your savings account. It’s always best to have a financial cushion for unexpected expenses. That way you’re covered for surprise repairs, medical bills, and even job changes.
What to do instead:
Aim to build an emergency fund with at least three to six months of living expenses. Additionally, set aside extra savings for closing costs, moving expenses, and any home updates or repairs you may need right away. A healthy reserve account can protect your investment from day one.
>> Read: How Much Money Do I Need to Buy a House?
Choosing the right mortgage
6. Don’t start house hunting without mortgage preapproval
To understand how much you can truly afford, mortgage preapproval is key. Without a preapproval letter, you might get attached to a home outside of your budget or miss out to another buyer who’s already qualified.
What to do instead:
Getting preapproved helps you understand how much you can realistically afford based on your credit, income, and debt. It also shows sellers that you’re a serious buyer, giving you a competitive edge.
>>Discover: How to Get Pre-Approved for a Mortgage: 7 Steps for Success
7. Don’t select the first lender you find
Don’t just go with the first mortgage offer you receive. If you shop around first, you could end up with a lower interest rate and better terms.
What to do instead:
To start, request quotes from multiple lenders, including banks, credit unions, and mortgage brokers. Compare interest rates, closing costs, and loan terms carefully. Even a small difference in rate could save you thousands.
>> Learn: How to Choose a Mortgage Lender
8. Don’t neglect looking at different loan types
Don’t assume a conventional loan with a 20% down payment is the only path to homeownership. There are many alternative mortgage options, and you might overlook a program better suited to your financial situation.
What to do instead:
Take time to research different loan types, including FHA loans with low down payment requirements, VA loans for eligible veterans, USDA loans for rural areas, and adjustable-rate mortgages (ARMs) that may offer lower initial rates.
Common loan types include:
- Conventional Loan: Offers flexible down payment options as low as 3% with private mortgage insurance (PMI). These require a higher credit score and must fall within conforming loan limits.
- FHA Loan: Require only 3.5% down and designed for buyers with lower credit scores. They do include mortgage insurance for the entire loan term.
- VA Loan: For eligible veterans, active-duty service members, and their families, a VA loan offers several advantages: no down payment, no mortgage insurance, and often lower interest rates.
- USDA Loan: For buyers looking in eligible rural or suburban areas, this option requires no down payment. Income limits apply based on location and household size.
- Adjustable-Rate Mortgage (ARM): Begins with a lower fixed rate, then adjusts based on market trends. These can help you save early on, but carry the risk of rate increases.
- Fixed-Rate Mortgage: Offers predictable monthly payments and a stable interest rate for the loan’s duration. This is ideal for buyers who plan to stay in their home long-term.
>> Read: 6 Types of Loan for First-Time Buyers
9. Don’t forget to budget for closing costs
Many buyers focus on saving for a down payment, but overlook another major expense: closing costs. These fees are due at the end of the homebuying process, and should be budgeted for.
What to do instead:
Before making an offer, talk to your lender about an estimate of your closing costs so you can plan ahead.
They typically range from 2% to 5% of the loan amount and may include:
- Application fee: Up to $500
- Appraisal fees: $300-$500
- Home inspection fee: $300-$500
- Title insurance: 0.5%-1% of the mortgage amount
- Loan origination fee: 1% of the loan amount
- Escrow fees: 1% of the home sale price
- Recording fees: $125
- Property taxes: Varies
- Homeowner’s insurance premiums: Varies
10. Don’t change jobs
Changing jobs right before or during the mortgage process raises concern for lenders. Even if the new position has a higher salary, a sudden shift in employment can delay or jeopardize your loan approval.
What to do instead:
Most lenders look for at least two years of steady employment in the same line of work. This consistency signals financial stability and lowers the risk in their eyes. If possible, hold off on any career moves until after closing.
Finding the right home
11. Don’t purchase beyond your means
A mortgage payment that’s too high paired with other costs can strain your monthly budget. You don’t need to have everything figured out from the start, but it’s smart to have an idea of what you can realistically afford.
What to do instead:
Before making an offer, use a home affordability calculator to estimate what you should aim to spend. This will estimate your target price range based on your income, debts, down payment, and projected expenses.
12. Don’t skip hiring a real estate agent
Trying to navigate the homebuying process on your own can be overwhelming in a competitive or unfamiliar market. A qualified real estate agent brings valuable expertise, from spotting red flags in listings to negotiating the best deal on your behalf.
What to do instead:
Work with a buyer’s agent who has your best interest in mind, helping you understand local pricing trends, schedule showings, handle paperwork, and avoid costly homebuyer mistakes. Their guidance is especially helpful for first-time buyers.
13. Don’t skip the home inspection
In a competitive market, it might be tempting to waive the home inspection to strengthen your offer, but the results can be costly. A home inspection provides a detailed assessment of the property’s condition, uncovering issues that aren’t visible during a walk-through.
What to do instead:
During this time, a licensed inspector will check for deeper issues like structural damage, plumbing concerns, or roofing problems. It will also allow you to negotiate repairs or adjust the offer if serious issues are found.
>>Read: Home Inspection Checklist For Buyers
Making a decision
14. Don’t skip on prioritizing your nice-to-haves over your must-haves
Focusing too much on cosmetic features can distract you from what truly matters. A home might have a stunning kitchen, but if it lacks enough space or isn’t in the right school district, it may not be the best fit long-term.
What to do instead:
Before you start your search, create a clear list of must-haves like number of bedrooms, location, or commute time. Then add a list of nice-to-haves, such as upgraded countertops or a big backyard. Prioritizing your essentials helps you stay focused, make practical choices, and find a home that fits both your lifestyle and your future.
15. Don’t get emotionally attached too quickly
It’s natural to have a favorite home, but getting emotionally attached early on clouds your judgment. You might overlook red flags, stretch your budget, or compromise on must-haves to make the deal work.
What to do instead:
Stay grounded by focusing on your non-negotiables and overall financial plan. Until the keys are in your hand, anything can happen, so it’s wise to maintain a level head and walk away if the terms aren’t right.
Steps to take for a successful home purchase
Learning what not to do when buying a house is only part of the equation. Taking smart, proactive steps will help you throughout the homebuying journey. Here’s how to set yourself up for success:
- Build and maintain excellent financial health: Manage your credit responsibly, save consistently, and avoid new debt when buying a home.
- Understand your borrowing power: Get pre-approved early and compare multiple lenders and loan types to find the best fit for your goals.
- Assemble your team: Partner with a trusted real estate agent and schedule a professional home inspection to protect your investment.
- Be realistic: Stick to your budget, focus on your must-haves, and be ready to walk away from a deal that doesn’t align with your priorities.
- Educate yourself: Keep learning about the market, mortgage trends, and the buying process so you can make empowered decisions.
The bottom line: What not to do before buying a house
Understanding what not to do when buying a house is just as important as knowing what steps to take. By being intentional with your finances, doing the homework, and leaning on trusted professionals, you’ll be better prepared to navigate the process with confidence. This is a huge step, but it can also be one of the most rewarding. Keep your goals in focus, stay informed, and trust that the right home is out there waiting for you.
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