1. Failure to initiate the approval process as soon as possible

The home buying process is exciting, so I totally understand the desire to dive in headfirst - but shopping for a home before receiving initial approval - also known as preapproval - can be a costly mistake.Taking the time to apply for approval ahead of time benefits home buyers in a variety of ways. Buyers have a reliable price range to stay within by getting their initial approval through a mortgage lender, so they don't set their sights too high or take on more than they can handle. Furthermore, being approved makes a buyer appear more serious to sellers, which can be advantageous in bidding wars. 

2. Obtaining just one mortgage quote

Obtaining a mortgage quote from a lender may appear time-consuming, as it typically entails speaking with a professional and submitting financial documentation.

Another lender may offer a deal that will save you money over the life of the loan, so getting multiple quotes is the best way for buyers to choose the right lender and get the best rates and terms possible. Mortgage interest rates vary by lender, as do fees like closing costs and discount points.

3. Purchasing a larger home than you can afford

Although an initial mortgage approval estimates how much house you can afford, this amount may not always fit within your budget because there is often a difference between your debt-to-income ratio (DTI) and your total monthly expenses.

When a lender reviews your financial information for approval, they use your DTI to calculate how much of your monthly income goes toward debt payments. As a result, purchasing a home for the full amount of your approved mortgage may make it difficult for you to afford other monthly payments. You are more aware of how much you can afford to pay for housing each month than your lender is. To determine how much house you can afford, create a budget that takes into account your monthly income, recurring expenses, and savings goals.

Purchasing a larger home than you can comfortably afford may cause homeownership stress and make it difficult to meet your other financial goals. Many first-time buyers want to buy a home and get a loan with a manageable monthly payment that won't keep them awake at night.

4. Not reviewing credit report

Ignoring or failing to monitor your credit score throughout the home-buying process can result in unchecked errors that can affect loan approval or result in less favorable loan rates and terms.

Although your credit is pulled during the lender's initial approval, it will be rechecked just before the scheduled closing date, and changes in your credit report may result in changes to your loan. Some home buyers may not see the need to check their credit report because their lender will do so as part of the pre-approval process. Check your credit score to see what loans you're eligible for, which will help you make the best personal decision. Mortgage lenders will scrutinize your credit reports when deciding whether to approve a loan and at what interest rate. If your credit report contains errors, you might get quoted an interest rate that`s higher than you deserve.

5. Failure to take advantage of first-time home buyer programs

You probably don't have a lot of money saved up for a down payment and closing costs as a first-time home buyer.  There are numerous low-down-payment loan programs available, including state programs that provide first-time home buyers with down payment assistance and competitive mortgage rates.  Some programs require first-time home buyer education, which can provide you with the information you need to purchase your first home.The minimum down payment for a Federal Housing Administration loan is 3.5%, and some conventional loan programs allow down payments as low as 3%.

6. Investigating the Neighborhood

Of course, the most important factor to consider is the house itself, but researching the neighborhood in which the house is located can also be beneficial. Examine school ratings and crime statistics, as well as the proximity to amenities such as restaurants and entertainment. Moving to a new home entails relocating to a new community, so it's a good idea to introduce yourself to potential neighbors.

7. Making decisions based of emotions 

However, while purchasing a home is an emotional milestone, it is also a financial one. With any financial investment, it is critical to make decisions based on facts rather than emotions. Purchasing your first home is an emotional experience, and it can be difficult to keep your excitement in check. It's also a significant investment that you should consider carefully in light of your personal needs and financial situation.

8. Opening/Closing Credit lines before purchase 

After you submit an offer on a home, the lender will conduct a final credit check before issuing the mortgage loan. New credit inquiries or credit lines may affect your mortgage total and rates, potentially delaying the closing. Getting a new credit card, buying furniture or appliances on credit, or taking out an auto loan before the mortgage closes is a bad idea.

Your credit score and debt-to-income ratio, which is the percentage of your income that goes toward monthly debt payments, influence the lender's mortgage decision. Taking out a new loan or increasing your monthly debt payments will raise your debt-to-income ratio.

The lender will run one last credit check about a week after the closing. If your credit score has dropped or your debt-to-income ratio has increased, the lender may change the mortgage interest rate or fees.

How to Avoid Making This Mistake: Open new credit accounts or charge furniture, appliances, or tools to your credit cards after the sale.

In conclusion: 

It's important to have the right team behind you in order to help you throughout this huge milestone. If becoming a homeowner is on your list of goals for this upcoming new year, contact me to get the process started!