Homeownership is a dream for many, with 94% of participants in a recent LendingTree study linking it to the American Dream. However, transitioning from renting to owning can be challenging, particularly for first-time buyers. From emotional decision-making to financial missteps, here are the most common mistakes new homebuyers make—and how to avoid them.

1. Overspending on Your Home

Many buyers underestimate the total costs of homeownership, which go beyond mortgage payments. Experts recommend spending no more than 25% of your take-home pay on housing expenses. Keep in mind the additional costs for maintenance, new appliances, and emergency repairs. Think long-term to ensure financial stability.

2. Saving Only for the Down Payment

While reaching your down payment goal is significant, it’s not the only expense to plan for. Closing costs, moving expenses, and furnishing your new home add up quickly. Save an additional 5% of the home price to cover these extras comfortably.

3. Skipping Mortgage Shopping

A mortgage is a long-term financial commitment, so don’t settle for the first quote you receive. Comparing rates and terms from multiple lenders can save you thousands of dollars. Even a 1% difference in interest rates can lead to significant savings over the loan’s lifetime.

4. Focusing Only on the Down Payment Percentage

While a 20% down payment avoids private mortgage insurance (PMI), many first-time buyers put down as little as 6%. Consider your financial situation carefully. If you have other immediate expenses, a smaller down payment may be more practical, but always weigh the long-term implications.

5. Letting Emotions Drive Decisions

It’s easy to fall in love with a property but remember, a home is also a financial asset. Avoid rushing into a decision based on emotions alone. Consider the neighborhood, future property value, and how the home aligns with your long-term goals.

6. Overlooking the Neighborhood

A home’s location is as important as its layout. Research the surrounding area, including amenities, schools, and community vibe, to ensure it fits your lifestyle. Remember, while you can renovate your home, you can’t change its location.

7. Skipping the Home Inspection

A professional home inspection identifies potential issues like structural damage or faulty systems. Use the findings to negotiate repairs or a price reduction. Skipping this step could lead to costly surprises down the line.

8. Waiting for the “Perfect” Home

No home is perfect, especially for first-time buyers. Be ready to compromise on some aspects while keeping your must-haves in mind. Cosmetic changes and renovations can always be made later.

9. Starting the Search Without Mortgage Preapproval

Getting pre-approved for a mortgage helps you understand your budget and shows sellers you’re a serious buyer. This simple step can make your offer stand out in a competitive market.

10. Mismanaging Credit During the Process

Keep your credit stable while house hunting. Avoid opening new credit accounts or making large purchases, as these can affect your credit score and jeopardize your mortgage approval.

Buying a home for the first time is exciting but requires careful planning. By avoiding these common mistakes, you can set yourself up for success and enjoy the journey to homeownership without unnecessary stress.