26 Costly Mistakes First-Time Homebuyers Regret (And How to Avoid Them)

This article was originally published on ChaChingQueen.com, a site my wife and I own. AI was used for light editing, formatting, and readability. But a human (me!) wrote and edited this.

A woman sits on the floor amidst cardboard boxes in an unfurnished room, looking pensive.Photo byDepositPhotos

Buying your first home is an exciting journey filled with big dreams and new possibilities. It's a major step towards building your future and creating a space that truly feels like your own. 

But let's face it, this adventure can also be pretty scary and overwhelming. There's a lot to learn, and making mistakes can cost you dearly in the long run.

A 2023 report by Clever found that 93% of recent homebuyers had regrets about their experience. Even more concerning, 42% of first-time buyers said they paid over the asking price for their homes.

In my decades of experience buying many houses, I’ve learned that almost anything in real estate can be negotiated. But to negotiate well, you need to know what you're doing. 

That's why I've put together this guide. My goal is to help you avoid the common pitfalls that trip up many first-time buyers. I'll walk you through 26 mistakes to watch out for, so you can make smarter decisions and feel confident in your home-buying journey. 

Do you agree with our list? Have you encountered any of these mistakes? Let us know in the comments!

Not Setting a Realistic Budget

Many first-time buyers jump into house hunting without a clear picture of their budget. This mistake can lead to heartbreak when you fall in love with a home you can't afford. 

Your budget isn't just about the mortgage payment, it includes property taxes, insurance, and maintenance costs too. Sit down and crunch the numbers before you start looking at homes. 

Include all your monthly expenses and leave room for savings and emergencies. This way, you'll know exactly what you can comfortably afford and avoid stretching yourself too thin. 

Skipping Mortgage Pre-Approval

Getting pre-approved for a mortgage is like having a secret weapon in your home-buying arsenal. It gives you a clear idea of what you can afford and shows sellers you're a serious buyer. 

Many first-time buyers skip this step, thinking it's not necessary. But in a competitive market, a pre-approval letter can make the difference between getting your offer accepted or losing out to another buyer. 

It also helps you avoid the disappointment of falling in love with a home outside your price range. Take the time to get pre-approved, it'll make your home search much smoother.

Neglecting to Check Your Credit Score

Your credit score plays a huge role in getting a good mortgage rate. Many first-time buyers don't realize how important this number is until it's too late. A bad credit score can lead to higher interest rates or even disqualify you for a mortgage altogether. 

Check your credit score early in the home-buying process. If it's not where you want it to be, take steps to improve it before you apply for a loan. Pay down debts, dispute any errors on your credit report, and avoid opening new credit lines. 

A good credit score can save you thousands of dollars over the life of your mortgage.

Failing to Ask Questions

Many first-time buyers feel embarrassed to ask questions or don't know what to ask. This can lead to misunderstandings and costly mistakes. Remember, there are no dumb questions when it comes to making such a big purchase. 

If you don't understand something about the mortgage process, the property, or any part of the transaction, speak up! Ask your real estate agent, lender, or lawyer to explain things in simple terms. 

They're there to help you. Asking questions now can save you a lot of headaches (and money) down the road.

Forgetting About Closing Costs

It's easy to focus on saving for a down payment and forget about closing costs. These additional expenses can come as a shock to many first-time buyers. Closing costs typically range 2-5% of the home's purchase price. 

That means on a $300,000 home, you could be looking at an extra $6,000 to $15,000 on top of your down payment. These costs can include loan origination fees, title insurance, appraisal fees, and more. 

Factor these expenses into your savings plan early on. Some buyers negotiate with sellers to cover part of the closing costs, but don't count on this, be prepared to pay them yourself.

Focusing Only on the Monthly Mortgage Payment

Many first-time buyers make the mistake of only looking at the monthly mortgage payment when budgeting for a home. But homeownership comes with many other costs that can quickly add up. 

Property taxes, homeowner's insurance, utilities, and ongoing maintenance are all part of the package. Don't forget about potential HOA fees if you're buying in a managed community. 

A good rule of thumb is to set aside 1-3% of your home's value each year for maintenance and repairs. Make sure you factor all these costs into your budget before deciding how much house you can afford.

Not Getting a Home Inspection

Some buyers skip the home inspection to save money or win a bidding war. This can be a very costly mistake. A thorough home inspection can reveal hidden issues like structural problems, plumbing leaks, or electrical faults that could cost thousands to fix. 

Even if the home looks perfect on the surface, you never know what issues might be lurking behind the walls. Always make your offer contingent on a satisfactory home inspection. 

If the inspection turns up major problems, you can negotiate repairs with the seller or walk away if needed. The cost of an inspection is small compared to the potential savings. 

Failing to Negotiate Terms 

Almost everything in a real estate transaction is up for negotiation. When negotiating to buy a house, don't limit yourself to just the price. Think creatively about what you can include in the deal.

I've negotiated for kitchen tables, entire sets of furniture, appliances, and even unique living arrangements. Don't be afraid to make requests, but be prepared to justify them. 

Use information from your home inspection, comparative market analysis, and other research to support your position. Remember, negotiation is a give-and-take process. Be willing to compromise on less important items to get what you really want.

Making a Small Down Payment

While it's tempting to get into a home with a small down payment, this decision can cost you in the long run. A smaller down payment often means higher monthly payments and the added expense of private mortgage insurance (PMI). 

PMI protects the lender if you default on your loan, and it can add hundreds to your monthly payment. If possible, try to save for a larger down payment. 

Aim for at least 20% of the home's value to avoid PMI. If that's not possible, look into first-time homebuyer programs that offer low down payment options without PMI.

Overlooking Neighborhood Research

Many first-time buyers focus solely on the home itself and forget to research the neighborhood. But the area you live in is just as important as the house you buy. Take the time to thoroughly investigate the neighborhood. 

Look into local schools, even if you don't have kids, good schools can boost property values. Check crime rates, proximity to amenities like grocery stores and parks, and commute times to work. 

Visit the area at different times of day to get a feel for traffic and noise levels. A perfect house in the wrong neighborhood can still be a bad investment.

Letting Emotions Drive Decisions

Buying a home is an emotional experience, but letting your feelings override logic can lead to poor decisions. It's easy to fall in love with a home's curb appeal or a beautifully staged interior. 

But don't let these surface-level attractions blind you to potential problems or cause you to overpay. Try to stay objective throughout the process. Make a list of your must-haves and deal-breakers before you start house hunting, and stick to it. 

If you find yourself getting caught up in the excitement, take a step back and sleep on any big decisions. A clear head will help you make choices you won't regret later.

Ignoring Future Resale Value

As a first-time buyer, you might not be thinking about selling your home. But it's important to consider the future resale value of any property you buy. Homes in undesirable locations or with quirky layouts may be harder to sell down the road. 

Pay attention to factors that could affect future value, such as upcoming development plans in the area, the age and condition of major systems like the roof and HVAC, and the overall layout of the home. 

While you should primarily choose a home that meets your current needs, keeping an eye on resale value can protect your investment in the long run.

Not Understanding Homeowner's Insurance

Most first-time buyers don't fully understant the ins and outs of homeowner's insurance, leading to inadequate coverage. Your policy should protect you against major disasters, but it might not cover everything you expect. 

Read your policy carefully and ask your insurance agent to explain anything you don't understand. Pay attention to coverage limits and deductibles. Consider additional coverage for valuable items or specific risks in your area, such as flood insurance. 

Don't wait until disaster strikes to find out you're underinsured. A good insurance policy gives you peace of mind and financial protection.

Overlooking Homeowner Association (HOA) Rules and Fees

If you're buying in a community with a Homeowner Association, make sure you understand the rules and fees before you commit. Some HOAs have strict regulations about everything from paint colors to pet ownership. 

These rules can significantly impact your lifestyle and future plans for the property. Ask to see the HOA's financial statements and reserve fund information. Low reserves could mean special assessments in the future, which can be costly. 

Factor HOA fees into your monthly budget, and be prepared for potential increases over time. Knowing what you're getting into with an HOA can prevent surprises and frustrations down the road.

Underestimating Home Maintenance Costs

New homeowners often forget to budget for ongoing maintenance and repairs. These costs can add up quickly and strain your finances if you're not prepared. Plan to set aside 1-3% of your home's value each year for maintenance and repairs. 

This fund will cover routine tasks like lawn care and HVAC servicing, as well as bigger expenses like roof repairs or appliance replacements. Stay on top of regular maintenance to prevent small issues turning into costly problems. 

Remember, as a homeowner, you're responsible for all repairs and upkeep. Building a maintenance fund into your budget helps ensure you can keep your home in good condition without financial stress.

Ignoring Zoning Laws and Restrictions

Many first-time buyers overlook zoning laws and local restrictions when purchasing a home. These rules can have a big impact on what you can do with your property. 

For example, if you're planning to run a business home or build an addition in the future, make sure the zoning allows it. Some areas have strict regulations about everything from parking to the types of pets you can have. 

Check with the local zoning office about any current or planned restrictions that might affect your property. Understanding these rules upfront can save you a lot of frustration and potential legal issues down the line.

Choosing the Wrong Mortgage Type

With so many mortgage options available, it's easy for first-time buyers to choose the wrong type. Fixed-rate mortgages offer stability with the same interest rate for the life of the loan. Adjustable-rate mortgages (ARMs) start with lower rates but can increase over time. 

Some buyers choose ARMs for the initial low payments without considering how rate increases could affect their budget in the future. Think about your long-term plans and financial situation when choosing a mortgage. 

If you plan to stay in the home for many years, a fixed-rate mortgage might be the safer choice. Talk to multiple lenders and ask lots of questions to find the best fit for your needs.

Overlooking Property Taxes

Property taxes can vary widely from one area to another, and many first-time buyers forget to factor them into their budget. High property taxes can make an otherwise affordable home out of reach. 

Research the property tax rates in the areas you're considering. Ask about any planned increases or special assessments that could raise taxes in the future. Remember, property taxes often increase over time, especially if home values in the area go up.

 Some areas offer homestead exemptions or other tax breaks for primary residences, so look into these possibilities. Including property taxes in your budget calculations gives you a more accurate picture of the true cost of homeownership.

Ignoring Assistance Programs for First-Time Buyers

Many first-time buyers miss out on helpful programs simply because they don't know about them. There are numerous assistance programs at the federal, state, and local levels designed to help first-time buyers. 

These can include down payment assistance, low-interest loans, or tax credits. Some programs are geared towards specific professions, like teachers or first responders. Others target particular areas to encourage homeownership. 

Do your research and ask your real estate agent or lender about programs you might qualify for. Taking advantage of these programs could save you thousands of dollars and make homeownership more achievable.

Making Unnecessary Upgrades Too Soon

It's tempting to start renovating as soon as you move in, but this can lead to regrets and unnecessary expenses. Live in your new home for a while before making major changes. 

This gives you time to understand how you use the space and what improvements will truly enhance your quality of life. You might find that some changes you thought were crucial aren't actually needed. 

Plus, immediate renovations can strain your budget when you're already dealing with the costs of moving and setting up your new home. Take your time, save up for improvements, and make thoughtful decisions about upgrades that will add value to your home.

Buying Based on Aesthetics Alone

Don't let a fresh coat of paint or staged furniture cloud your judgment. Many first-time buyers focus on superficial features and overlook important structural or functional aspects of the home. 

Look beyond the surface and pay attention to the bones of the house, its structure, systems, and location. A beautifully decorated home might hide serious issues, while a less attractive property could be a hidden gem with great potential. 

Consider things like the layout, natural light, and flow of the space. Remember, you can always change decor, but you can't easily change the fundamental characteristics of the home.

Misjudging Your Long-Term Needs

It's easy to focus on your current situation and forget about future needs when buying your first home. That cute starter home might seem perfect now, but will it still work in five years? Think about your future plans. 

Are you planning to start a family? Work home more often? Have aging parents move in? Consider how your space needs might change over time. 

While you can't predict everything, try to choose a home that can adapt to your changing lifestyle. It's often more cost-effective to buy a home you can grow into rather than outgrowing your home quickly and needing to move again.

Not Considering Utility Costs

Utility bills can vary widely depending on the size, age, and efficiency of a home. Many first-time buyers forget to factor these costs into their budget. An older home with poor insulation could cost a fortune to heat and cool. 

Ask to see recent utility bills for any home you're seriously considering. Look for energy-efficient features like double-pane windows, good insulation, and modern HVAC systems. These can help keep your utility costs down. 

Also, consider the climate in your area and how it might affect energy usage. Including utility costs in your budget calculations gives you a more accurate picture of the true cost of living in the home.

Rushing the Buying Process

In a competitive market, it's tempting to make snap decisions. But rushing can lead to costly mistakes and buyer's remorse. Take your time to find the right home, even if it means losing out on a few properties. 

Don't let anyone pressure you into making an offer you're not comfortable with. If you feel rushed or unsure, take a step back and reassess. It's better to wait for the right home than to buy the wrong one in haste. 

Remember, this is likely the biggest purchase you've ever made. Give it the time and consideration it deserves.

Not Getting Everything in Writing

Verbal agreements don't hold up in real estate transactions. Every promise, every agreement should be written into the contract. This includes repairs the seller agrees to make, appliances or fixtures included with the home, and any other conditions of the sale. 

If it's not in writing, it's not part of the deal. Don't rely on handshake agreements or verbal promises. If something is important to you, make sure it's included in the written contract. 

This protects you if there are any disagreements or misunderstandings later on.

Not Understanding the Importance of Home Size

Choosing the right size home is crucial for both your comfort and your budget. A home that's too small will feel cramped and you'll outgrow it quickly. On the other hand, a home that's too large means you're paying for space you don't need and higher utility costs. 

Think carefully about how much space you truly need. Consider your lifestyle, storage needs, and any plans for future family growth. Remember, it's not just about square footage, the layout and use of space are equally important. 

A well-designed smaller home might work better than a larger home with an awkward layout. Choose a size that fits your lifestyle and budget, both now and in the foreseeable future.

Your Home, Your Future

Buying your first home is a big step, but it doesn't have to be an overwhelming one. Avoiding these common mistakes will put you on the path to a smoother, more successful home-buying experience. 

Remember, knowledge is power in real estate. Do your homework, ask plenty of questions, and don't hesitate to seek help when you need it. 

With careful planning and informed choices, you'll find the right home that fits your lifestyle and budget. Your perfect home is out there waiting for you. 

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