Buying a home is one of the biggest financial decisions most people will make in their lifetime, and that risk can feel overwhelming. While it’s an exciting milestone, the mortgage process can be confusing—and even small missteps can lead to costly consequences. 

Whether you’re a first-time buyer or a seasoned homeowner, steering clear of these common mortgage mistakes can save you time, money, and stress.

1. Not Checking Your Credit Score Early

Your credit score plays a crucial role in determining your mortgage eligibility and interest rate. One of the biggest mistakes homebuyers make is waiting until the last minute to check their credit. Errors on your report or a lower-than-expected score can delay the process or result in less favorable loan terms.

Tip: Check your credit report several months before applying for a mortgage. Dispute any inaccuracies and work on improving your score by paying down debt and making all payments on time.

2. Skipping the Mortgage Pre-Approval

Many buyers start house hunting without getting pre-approved for a mortgage. This can backfire if you fall in love with a home that’s out of your budget or if sellers won’t take your offer seriously without a pre-approval letter.

Tip: Get pre-approved before you start shopping. This will give you a clear budget and make you a more competitive buyer.

3. Underestimating the Total Cost of Homeownership

It’s easy to focus only on the purchase price and monthly mortgage payment, but homeownership includes other recurring costs—property taxes, homeowner’s insurance, maintenance, utilities, and possibly HOA fees.

Tip: When budgeting, factor in all potential expenses, not just the mortgage. A good rule of thumb is to keep total housing costs below 30% of your gross income.

4. Making Big Financial Changes During the Process

Once you’ve applied for a mortgage, any major changes to your finances can jeopardize your approval. This includes changing jobs, opening new lines of credit, or making large purchases like a car or furniture.

Tip: Keep your financial profile stable from the time you apply until your loan closes. Hold off on big purchases and career changes until after you’ve secured your mortgage.

5. Choosing the Wrong Loan Type

There are several types of mortgage loans, including fixed-rate, adjustable-rate, FHA, VA, and USDA loans. Picking the wrong one can cost you in the long run.

Tip: Talk to a mortgage advisor or lender to fully understand your options. Consider your financial situation, how long you plan to stay in the home, and your tolerance for payment volatility when selecting a loan type.

6. Focusing Only on Interest Rate

While a low interest rate is important, it shouldn’t be the only factor in choosing a mortgage. Fees, points, and loan terms can have a big impact on your overall costs.

Tip: Focus on the annual percentage rate (APR) when shopping for a mortgage.  The APR includes the interest rate plus other loan-related costs. This gives you a clearer picture of what you’ll actually be paying.

7. Not Shopping Around for Lenders

Many buyers go with the first lender they talk to, but rates and fees can vary significantly between institutions. Failing to shop around could mean paying more over the life of your loan.

Tip: Get quotes from at least three different lenders. Compare interest rates, closing costs, and customer service to find the best fit.

8. Draining Your Savings for the Down Payment

It’s tempting to put every last dollar into your down payment to reduce your loan amount, but this can leave you financially vulnerable.

Tip: Keep an emergency fund intact. Unexpected expenses come with owning a home, and you’ll need cash on hand for repairs, maintenance, or job loss.

9. Overextending Your Budget

Just because you’re approved for a certain loan amount doesn’t mean you should spend it all. Buying a home at the top of your budget leaves little room for flexibility or savings.

Tip: Stick to a mortgage amount that fits comfortably within your monthly budget. Consider future expenses like childcare, education, or retirement.

10. Failing to Read the Fine Print

Mortgage documents are full of details that can affect you down the line—like prepayment penalties, balloon payments, and escrow requirements. Skipping over the fine print can lead to unpleasant surprises.

Tip: Read all documents carefully and ask questions about anything you don’t understand. Don’t sign until you’re confident in the terms.

Putting it all together

The mortgage process doesn’t have to be overwhelming, but as you can see, there are some pitfalls along the way. By avoiding these common mistakes, you can approach your home purchase with greater confidence and financial security. 

Remember, a little preparation and research can go a long way in making your homeownership journey smoother and more affordable.