Buying a home is one of the biggest financial decisions most people make in their lifetime. But for many first-time homebuyers—and even experienced ones—the mortgage process can be overwhelming. A small mistake could cost you thousands of dollars or delay your dream of homeownership.

To help you navigate the home loan process confidently, we’ve compiled a list of common mortgage mistakes homebuyers make—and how to avoid them.

1. Not Getting Pre-Approved Before House Hunting

Why it's a mistake:
Skipping mortgage pre-approval can lead to heartbreak. You may fall in love with a home that's outside your budget or lose out to buyers who already have financing lined up.

How to avoid it:
Get pre-approved early. A pre-approval letter shows sellers you’re serious and tells you exactly how much you can afford.

2. Underestimating the Total Cost of Homeownership

Why it's a mistake:
Many buyers focus only on the monthly mortgage payment. However, property taxes, homeowners’ insurance, private mortgage insurance (PMI), HOA fees, maintenance, and utilities can add up.

How to avoid it:
Use a comprehensive mortgage calculator and ask your lender to break down all recurring and one-time expenses. Budget realistically.

3. Making Big Financial Changes Before Closing

Why it's a mistake:
Changing jobs, opening new credit lines, or buying a car during the mortgage process can raise red flags and even lead to a loan denial.

How to avoid it:
Wait until after closing before making any big purchases or career moves. Keep your financial profile stable until your mortgage is finalized.

4. Choosing the Wrong Type of Mortgage

Why it's a mistake:
A 30-year fixed-rate loan isn't always the best option for everyone. Choosing the wrong loan term or mortgage type can cost more over time.

How to avoid it:
Work with your mortgage advisor to explore all options—FHA, VA, conventional, adjustable-rate mortgages (ARMs)—and pick what suits your financial goals and timeline.

5. Not Shopping Around for Mortgage Rates

Why it's a mistake:
A small difference in interest rates can significantly impact your monthly payment and the total amount paid over the life of the loan.

How to avoid it:
Compare offers from at least 3–5 different lenders. Ask about fees, rate locks, and closing costs, not just the interest rate.

6. Skipping the Fine Print

Why it's a mistake:
Not reading or fully understanding your loan terms can lead to surprises, like penalties for early repayment or adjustable rates that suddenly spike.

How to avoid it:
Review every document carefully. Don’t hesitate to ask your lender or real estate agent to explain anything unclear before signing.

7. Draining Your Savings for the Down Payment

Why it's a mistake:
Using all your savings for the down payment leaves you vulnerable to unexpected expenses and may delay important home improvements or repairs.

How to avoid it:
Aim to keep at least 3–6 months’ worth of expenses in an emergency fund. Some loans offer low down payment options if needed.

8. Ignoring Your Credit Score Until It’s Too Late

Why it's a mistake:
A lower credit score can mean higher interest rates or a denied application altogether.

How to avoid it:
Check your credit report months before applying. Dispute errors, pay down debt, and avoid late payments to improve your credit score.

Avoiding these common mortgage mistakes could save you time, money, and stress. The key is preparation, education, and working with trusted professionals. Whether you’re a first-time buyer or moving into your forever home, understanding the mortgage process is essential for a smooth and successful experience.

Looking to buy a home? Speak with a qualified mortgage advisor or real estate agent to make informed decisions every step of the way.

Matt Witte strives to be the best realtor in Andover MA.

Any questions about real estate, reach out to Matt Witte, Andover

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