What Are the Biggest Mistakes First-Time Buyers Make?

The biggest mistakes first-time buyers make are skipping pre-approval, underestimating the true cost of buying, changing their finances before closing, waiving the inspection, and signing documents they do not fully understand. Every one of them is avoidable with preparation.

Mistakes before you start shopping

Skipping pre-approval. This is the most common mistake we see. Without a pre-approval letter, many sellers will not treat your offer as serious, and you may not be able to compete when there are several buyers. Pre-approval is different from pre-qualification. Pre-qualification is a casual estimate based on information you provide. In a pre-approval, a lender verifies your income, credit, and assets and tells you how much you can borrow. Get pre-approved before you tour homes.

Underestimating the true cost. Most first-time buyers focus on the down payment. Closing costs are due on top of it, and they include items such as title insurance, lender fees, escrow deposits, and prepaid property taxes and homeowners insurance. Your lender will give you an estimate. Costs also show up after you move in, such as an older furnace, a water heater near the end of its life, or appliances that need replacing. Plan for the down payment, plan for closing costs, and keep a separate emergency reserve that you do not touch during the purchase.

Choosing a lender on rate alone. The rate is one piece of the picture. It also matters how quickly the lender can close, how responsive they are, and whether they know the programs available to first-time buyers. Minnesota Housing offers first-time buyer programs that can include down payment assistance, and a lender who is not familiar with them may not mention help you qualify for. Ask your lender to confirm the current program rules.

Mistakes while you are choosing a home

Letting emotion make the decision. You should feel something when you walk into the right home. The problem comes when emotion is the only filter. It can lead buyers to overpay, overlook inspection findings, or stretch their budget too far. Before any offer, ask three questions. Does this home fit my budget without strain? Does it meet my actual needs? Would I still feel good about this decision a year from now?

Looking only at the house. A home stays in one location. Before you make an offer, visit the area at different times of day. Check the distance to your workplace, grocery stores, parks, and schools, and look at recent sales nearby. You can renovate a kitchen. You cannot move the house.

Mistakes once you are under contract

Changing your finances. Your lender may verify your credit, income, and assets again right before closing. From the day you apply until the day you close, do not open new credit, make large unplanned purchases, change jobs, or move money around without telling your lender first. Any of these can delay your closing or put your loan approval at risk.

Waiving the inspection. Buyers in competitive situations sometimes feel pressure to waive the inspection contingency. That risk is rarely worth taking. An inspection shows you the true condition of the roof, foundation, electrical, plumbing, and heating and cooling. If you are competing with other offers, talk with us about ways to stay competitive without giving up that protection entirely.

Signing without understanding. A purchase agreement is legally binding. It sets timelines, contingencies, and what you are committing to financially. Before you sign, have your REALTOR® walk you through every section, including the inspection contingency, the financing contingency, the closing date, and what happens if the appraisal comes in low. For legal questions, confirm with a real estate attorney.

Choosing the right agent

First-time buyers do best with someone who expects questions and treats education as part of the job. When you interview an agent, ask how many first-time buyers they work with, how they make sure you understand each step, and what resources they provide.

Mistakes specific to Minnesota

• Underestimating property taxes. They vary by city and county, so ask for the current annual taxes on any home and build them into your monthly budget.
• Ignoring HOA fees and rules. Many townhomes and some detached-home communities have associations. The fees add to your monthly cost, and the rules may limit rentals, renovations, or parking.
• Buying more house than you need. Minnesota winters bring higher heating bills, and a larger home costs more to heat.

Common questions

Do I need a REALTOR® as a first-time buyer in Minnesota? You are not legally required to have one, but we strongly recommend representation. Commissions are negotiable, so ask any agent you interview to explain how they are paid.

What is the minimum down payment for a first-time buyer? It depends on the loan type. Conventional loans can go as low as 3 percent, and FHA loans require 3.5 percent with a qualifying credit score. Minnesota Housing programs may add assistance. Your lender confirms the current numbers.

Can I back out of a purchase agreement after signing? Yes, under specific conditions and timelines. The inspection and financing contingencies are the most common ways a buyer can exit without losing earnest money.

If you are getting ready to buy your first home, or you have questions about where to begin, send us a message and we will help you build a plan. Our page for first-time buyers explains how we walk you through each step.