Homebuyer mistakes to avoid (plus, how to spot red flags)

But before you start picking out paint swatches and dreaming of cozy nights on your new couch, there are a few things you should know to avoid roadblocks and the dreaded “oops, I didn’t know that was a thing” moments.

Don’t worry—we’ve got your back.

We’ll walk you through common homebuyer mistakes to avoid, red flags to watch for when house hunting and hidden costs you’ll need to plan for to ensure a smooth homebuying experience.

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5 mistakes to avoid

Before diving into the homebuying process, take a moment to hit pause. It’s easy to get swept up in the excitement of finding “the one.” But rookie mistakes can be costly.

Here are five mistakes to avoid—and what to do instead:

|1| Not understanding your credit score

Your credit score affects your mortgage eligibility and the interest rate you’ll pay. Some buyers don’t give themselves enough time to review their credit—and build their score if needed—before they apply for a home loan.

What to do instead: If you’re thinking about buying a home within the next year, you’ll want to check your credit report now to see where it stands.

As a Dupaco member, you have free access to your credit score and report in Bright Track.

Even if your credit isn’t where you’d like it to be, there are ways you can improve it:

• Pay your bills on time: Set up automatic payments for bills so you never miss a payment.
• Keep credit card balances low: Aim to use less than 30% of your available credit.
• Avoid opening or closing accounts: The longer your credit history, the better. Keep your accounts steady while you prepare for homeownership.

Review my credit with a free Credit History Lesson >

|2| Not saving enough for your down payment

Many first-time homebuyers wish they had saved more for their down payment. A larger down payment can help you avoid PMI (Private Mortgage Insurance), which can be costly.

Lenders typically require buyers to purchase PMI when their loan is more than 80% of their home’s purchase price. The insurance protects the lender if the homeowner defaults on the loan. (But it’s an extra expense that you’d likely prefer to avoid!)

What to do instead: Take the time save for your down payment.

Pro tip: Naming your savings goal can help you stay motivated and focused. That’s why Dupaco’s Share Savings accounts come with tools to make saving for your dreams—like homeownership—easier.

Plus, a free Dupaco Money Makeover could help you identify areas where you could cut costs and save more.

Request my free Money Makeover >

Another option? You might be able to piggyback your home loan. This involves taking out two loans instead of one, which may allow you to skip PMI.

Learn how this strategy works >

|3| Making big job or money changes

Before making any major career or financial moves (like opening new credit lines or closing accounts), check with your lender.

Any changes can impact your mortgage approval, since your pre-approval is based on your current financial snapshot, which includes:

What to do instead: Keep your finances steady throughout the process to avoid raising any red flags that could delay or jeopardize your loan approval.

|4| Not sticking to your budget

It’s easy to fall in love with a house that’s outside your price range. But remember, your mortgage is only one piece of the puzzle.

What to do instead: Factor in all the other costs that come with homeownership, like property taxes, utilities, insurance and future repairs. (We’ll talk more about these expenses later!)

A good rule of thumb is to keep your housing costs at or below 30% of your pre-tax income. To prepare, try adjusting your budget now and testing it out before you buy a home.

For example, if your rent is $1,000 a month but a house would raise your monthly payment to $1,500, set up an automatic transfer for the extra $500 into a Dupaco You-Name-It Savings account. Stick with this for three months and see how it feels.

Can you comfortably handle the higher payment without cutting into other expenses and goals?

Taking this proactive approach lets you get a clearer picture of what your new financial reality might look like. It’s better to be conservative upfront than to overstretch yourself later.

|5| Rushing to purchase the first house you like

It’s easy to get excited about a house. But rushing into a purchase can lead to regret.

What to do instead: Take your time and view multiple homes so you can compare your options. Make sure the house fits your long-term needs—not just your immediate desires.

And don’t hesitate to visit a property again before making an offer.

Red flags to watch for when house-hunting

When house-hunting, it’s easy to get swept up in excitement. But staying vigilant is crucial to avoid hidden issues down the road.

Here are some red flags to watch for:

Structural and foundation issues

• Doors that don’t close properly: If doors don’t close or align properly, it could signal foundation problems or moisture damage.
• Sagging ceiling: A sagging ceiling can indicate leaks, plumbing issues or even structural damage.
• Sloping floors: Floors that slope noticeably might point to foundation problems. A structural engineer can tell you why it’s sloping and how much it could cost to fix the issue.

Moisture and air quality concerns

• Musty smell: A musty odor could signal hidden mold, which can cause health issues and expensive repairs.
• Poor ventilation: A stuffy, humid house could have ventilation issues, leading to moisture buildup and potential mold.
• Strong air fresheners: If the home is heavily scented, it might be covering up pet odors or mold. Ask for another showing without the artificial fragrances to get a clearer picture.

Neighborhood and property considerations

• “Up-and-coming” neighborhood: While the potential for growth can be exciting, an “up-and-coming” area could mean construction and other disruptions. Make sure you’re comfortable with the uncertainty.
• “As-is” listing: If the seller is offering the house “as-is,” they won’t make repairs. This could be a sign of hidden issues, so a thorough inspection is crucial.
• Below-market price: A home priced well below market value may have major problems the seller doesn’t want to fix. You’ll want to get an inspection and estimate repair costs before committing.

Exterior and roof issues

• Worn roof shingles: Cracked or curling roof shingles could indicate the roof is near the end of its life. Roof repairs are costly, so you’ll want to factor this into your decision.

Hidden costs of buying and owning a home

A common mistake homebuyers make is not accounting for all the costs associated with buying and owning a home. If you don’t plan for these expenses, they could catch you off guard. Here are some of the often-overlooked costs:

Home inspection ($300-$500)

While not always required, a thorough home inspection could save you thousands of dollars in future repairs. The inspection checks for hidden issues, like foundation problems or faulty plumbing. If major issues are found, you can try to renegotiate the price or request repairs.

Appraisal ($300-$600)

Most lenders require an appraisal to ensure the home’s value matches the purchase price—protecting you from overpaying. If the appraisal comes in lower, you may need to renegotiate or cover the difference.

Closing costs (2-5% of purchase price)

In addition to your down payment, you’ll need to budget for closing costs, which could include expenses like:

Homeowner’s insurance ($1,000-$3,000 annually)

Homeowner’s insurance is also required to protect your investment from risks like fire or theft. It often needs to be paid upfront for the first year. If your home is in a high-risk area—like a flood zone—you may need additional coverage, which will increase your premiums.

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Property taxes (varies annually)

Property taxes can be a major ongoing expense and vary widely by location. Be sure to research the local tax rate to avoid surprises. Many lenders require you to set up an escrow account to cover taxes.

Private mortgage insurance (a percentage of the loan annually)

Don’t forget: If your down payment is less than 20% of the home’s purchase price, you’ll likely need to pay private mortgage insurance (PMI). PMI can cost about 0.3%-1.5% of the loan amount annually. It can be removed once you have 20% equity in your home.

Learn how to avoid paying private mortgage insurance >

Moving costs ($500-$3,000)

Moving costs can add up quickly, especially if you hire movers or rent a truck. Don’t forget about utility hookups and other moving-related expenses.

Immediate repairs (varies)

Once you’re in, you might need to make some immediate repairs or updates. From fresh paint to replacing outdated fixtures or appliances, these costs can range from a few hundred to several thousand dollars.

Final thought

House-hunting is a journey. And while it’s easy to get excited about a property, staying vigilant is key to avoiding costly surprises later.

Keep an eye out for red flags, avoid common homebuyer mistakes and ask the right questions. If something doesn’t feel right, don’t hesitate to walk away. Happy house-hunting!

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