First-Time Home Buyer Mistakes: What Every New Homebuyer Should Avoid

Key Takeaways

• The most common first time home buyer mistakes include:
  • skipping mortgage pre-approval
  • underestimating closing costs
  • shopping for a home before setting a budget
• Working with an experienced local agent helps you avoid house buying mistakes tied to pricing, negotiation, and paperwork.
• A little preparation up front, from credit checks to understanding your local market, makes the entire process smoother and less stressful.

How to Be Smart When Buying Your First Home

If you’ve set out to buy your first home, accept our congratulations. This is a big step and probably one of the most consequential decisions you’ll make. You’re putting down roots but in the flurry of open houses and late-night Zillow searches, it’s easy to get swept up in the excitement. A mistake in this process can mean dealing with an issue long after you’ve moved into your dream home.

We’ve been guiding buyers looking at homes for sale across Minnetonka, MN through Excelsior Realty since 2004. Over the years, while we’ve helped our (future) neighbors find the right property, we’ve built a reference list of common first time home buyer mistakes. This list is ever-evolving, of course, but we know what’s likely to end poorly and what tends to be a better plan of action.

8 Mistakes First-Time Homebuyers Make

Here are the most common mistakes that people make when buying a home for the first time:

1. Putting Off (or Skipping) Mortgage Pre-Approval

One of the first things you should do when buying a home is find out how much you can realistically afford. This is what mortgage pre-approval (broadly) tells you. Before you start touring homes, a lender reviews your finances and gives you an estimate of how much they’re willing to lend you. This gives you a clear budget to work with and helps you focus on homes that are within your price range.

Getting pre-approved can also make your offer more appealing to sellers. It shows that you’ve already spoken to a lender and are serious about buying.

2. Not Setting a Realistic Budget

It is tempting to stretch for a bigger house or a better street, but a mortgage payment is only part of the real cost of owning a home. You should also look at:

• property taxes
• homeowners insurance
• utilities
• homeowner association fees
• ongoing maintenance 

A good rule of thumb is to leave room in your budget for the unexpected. Maxing out your approval amount on the mortgage alone, with nothing left over for moving costs or a rainy-day fund can be a risky move.

3. Underestimating Closing Costs

We know we’ve been going on about budget, but that’s where most of us at Excelsior Realty have seen the biggest first time home buyer mistakes. 

Closing costs are between 2 and 5% of the purchase price. They cover things like:

• loan origination fees
• title insurance
• appraisal fees
• attorney fees. 

You need to budget for these costs with the actual property asking price. 

4. Skipping the Home Inspection

Some buyers choose to waive the inspection to make their offer more appealing, especially in competitive markets. Our realtors often see this in the areas we serve, including Minnetonka, Wayzata, Orono, and surrounding communities. 

While this can occasionally help win a bidding war, it is a risky move. An inspection can uncover issues with the roof, foundation, plumbing, or electrical systems that are not obvious during a walkthrough.

An inspection (provided it’s conducted thoroughly) gives you the chance to negotiate repairs or price before you are locked into the purchase, rather than discovering a costly problem after you already own the home.

5. Ignoring the Neighborhood

Yes, that kitchen is to die for. We see it: the backyard space is incredible. 

But what’s beyond your property line? At Excelsior Realty, here’s what we recommend first-time home buyers consider when choosing a neighborhood: 

• commute times
• school districts
• nearby amenities (hospitals, grocery stores, hardware stores, eateries, shopping complexes, and more)
• noise levels
• future development plans

All of these affect your day-to-day life and your home’s long-term value.

Here’s our tip to avoid this first time home buyer mistake: visit the neighborhood at different times of day, talk to potential neighbors if you can, and research the area beyond the listing photos before making an offer.

6. Making Large Purchases Before Closing

It’s best to keep your finances as stable as possible until you close on your home. That means holding off on major purchases, such as financing a new car, opening a store credit card, or taking on a new loan.

These changes can raise your debt-to-income (DTI) ratio. This is the amount of your monthly income that goes towards paying debts. A higher DTI can be a hurdle to qualifying for your mortgage. It can even change the loan terms you were offered (sometimes, even after pre-approval).

Until the keys are in your hand, it’s usually best to keep your financial situation steady.

7. Trying to Navigate the Process Alone

Yes, this is your home, but the process to get to the exciting part is laborious. Buying a home means fielding contracts, negotiations, disclosures, and deadlines. These are difficult to manage for anyone, let alone first-time buyers.

Working with an experienced local agent helps you avoid the house buying mistakes that come from misreading a contract clause or missing a contingency deadline.

A knowledgeable agent also brings insight into local market conditions and pricing that is hard to replicate with solo online research.

8. Ignoring Future Resale Value

Even if you plan to stay in your first home for many years, your circumstances can change. A new job, a growing family, or a move to another city could mean you need to sell sooner than expected.

That’s why it’s worth considering a home’s resale value before you buy. Certain features can make a property harder to sell later, such as:

• A layout designed for a very specific need
• An oversized addition that feels out of place in the neighborhood
• A location with limited long-term appeal

You should definitely choose a home that works for you, but it’s wise to think about what might appeal to future buyers too. The balance is often not difficult to find.

Buy Your First Home with the Right Team Behind You

Most first time home buyer mistakes are a result of plunging into the process without the right information or without the right people backing you up. 

A little preparation and an agent who knows the local market can mean you get through this process with the least amount of stress and really feel the excitement around this major milestone. 

Excelsior Realty was founded in 2004 to make real estate feel a bit more personal. Our team are all locals of the areas we serve, and we’re fiercely passionate about nurturing our communities. Our certified realtors and brokers fight to get you the best deal and keep your best interests at heart. With us, you can steer clear of these house-buying mistakes​ and many more, specific to your case.

If you’re looking forward to buying your first home, contact Excelsior Realty today, or browse current homes for sale in Minnetonka, MN, and beyond.

We serve the communities around the beautiful Lake Minnetonka. 

Get in touch: hello@excelsiorrealty.com

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