Learn from these common first time home buyer mistakes (some we personally made) so that you can save yourself a lot of money and headaches in your new home.

realtor handing keys to couple for their first home with text overlay "5 first-time home buyer mistakes to avoid"We made so many (common) home buyer mistakes when we bought our first time 9 years ago.

And you know what? Some of them are still costing us money.

Since I’m all about showing others how to spend less and how to get more of their paychecks into their savings account, I want to share with you the most common first-time home buyer mistakes home-buyers make.

Trust me – if you’re in the market for your first home (or even your second), you’ll want to pay attention to both common first-time home buyer mistakes + the ones we personally made.

Mistake #1: Not Vetting a Home Inspector

The home buying process – especially the first time around – is completely overwhelming.

We had knots in our stomachs, we broke a sweat more than once, and we questioned ourselves along the process.

Because of how lengthy the entire process is, we didn’t even think twice about who the home inspector was for our house. It was someone recommended by the seller’s real estate agent (a bit of a red flag, there), and we just went with it.

To be honest, we didn’t even know you COULD shop around for a home inspector. They just made it seem all matter-of-fact, and so we just went with the flow.

That simple mistake has cost us TENS of thousands of dollars over the year.

This is not to say that we still wouldn’t have bought the house if we had known all the things that would need to be completely gutted during our ownership, but it could have given us a better bargaining chip to negotiate the price down (so that we COULD more easily pay for all the renovations/repairs).

This includes things like:

  • $7,000+ Foundation Repair within a few years of ownership
  • 2 new Central A/C Units and furnaces instead of the one that we thought we’d have to do (Over $11,000 for both)
  • The entire home needs to be re-piped because it’s galvanized piping, which starts to break down at this point (we didn’t know anything about the plumbing, and weren’t told this)
  • The back patio is made out of indoor tiles, so they get seriously slick when wet + they have mostly broken away in the last 9 years

Hint: stick around to the end, where I share my bonus home inspection tips for first time buyers.

Mistake #2: Buying All New Furniture and Appliances

It’s very common for new homeowners to get so excited about everything that they want to deck it all out in new furniture and appliances.

Here’s what I suggest you do instead: focus on buying ONE new appliance or piece of furniture, and use what you’ve got or hand-me-downs to take care of the rest.

Then, upgrade incrementally as the years move on. This is one of those money saving tips that will help you in the long run.

And if I were you? I would make your home splurge REALLY count, meaning make it something you’re going to use all the time.

For us, this meant buying a refrigerator when we moved in. It was the only big purchase we made, and we chose it because we had mistakenly thought there was a refrigerator included with the house (it ended up being a kegerator…which leads to Mistake #3 below).

And then just recently? We upgraded to a Saatva Luxury Firm Mattress – because, let’s be real, you literally spend around 8 hours every single day in your bed. Buying a new mattress is a GREAT way to feel like you’re really upgrading things.

We could have bought both at the same time, but I’m glad we didn’t – we really needed that money for other things at the time.

Mistake #3: Not Thoroughly Reading Your Contract

On closing day, you will be swamped in paperwork. You might even get a knot in your own stomach – like we did – and feel like you’re signing your life away.

I’m a contracts person, and so I tried my best to look over all of the paperwork being sent our way in the closing room. And I know that I read more than most, as the closing person clearly showed her dissatisfaction at the slow progress we were making.

But guess what I missed? The sellers had put an asterisk in the contract saying that the refrigerator in the garage was included (I thought they meant the refrigerator in the kitchen).

After closing and turning the keys to our new home for the first time, we quickly learned that they had left their kegerator “refrigerator” for us in the garage, and taken the one in the kitchen. And, yes, it was there in “plain” black and white (our realtor pointed out to us, after we called her and asked what had happened).

*sigh*.

Do I think you’re going to catch everything in the contracts? No. But you need to read through them, that’s for sure.

Mistake #4: Emptying Your Savings Account for the Down Payment

Just one month after we purchased our home, we lost our second car. It was a beater car anyway, so its days were numbered. But, did we think we’d need to pay for a second vehicle right after paying for a down payment?

Nope.

We ended up paying cash for another beater car, but for a few months there we were very low in our emergency savings fund.

Let our mistake be a lesson to you: do NOT empty your savings account and/or emergency fund to pay for the down payment.

You don’t know what issues you’re going to find in your home, or what life will throw at you once you buy your first home. So, you need to save up a down payment ON TOP OF your emergency savings fund.

Mistake #5: Expecting Too Much Out of a Home Warranty

Many times when you buy an older home, they'll throw in a 1-year Home Warranty service for free. It's to help you feel better about some of the things that are on the way out in your home, especially after just plunking down most of your savings to get it.

And don't get me wrong —  it can be helpful.

But you can't expect too much from it (like we did, as first-time homebuyers).

Here's how this went down, for us.

When Paul and I purchased our home, we were quite put off by the outdated A/C and heating units. Each time we were in the house, we loved everything about it…except breaking out in sweat.

We did our homework and found out the cost of how much it would be to replace the two compressor units. Then at the negotiating table, we asked the owners to drop their price by $5,000, which would cover our costs.

They balked and offered $600 off the price, which they calculated is what it would cost to place new Freon in the system. We were sorely disappointed.

Finally, they decided to give us $800 off the asking price, plus pay for a year on a Home Warranty extended plan (approximately $475) so that if they A/C units died on us in our first year, the home warranty company would pay the cost.

We accepted.

I honestly wish I hadn't — and I can say that from the standpoint of having replaced both the Central A/C units in the upstairs and downstairs of our home, at a cost of approximately $11,000.

We spent that first June together in a home that would not go below 84 degrees Fahrenheit in a humid-plagued city (Houston).

Over the course of 15 service calls to the Home Warranty company, we had the following done (remember, you have to pay a $60-$75 service fee each time; though if it's the same problem, they usually don't charge you again):

  • Cleaned the coils and flushed out the line before adding all new Freon.
  • Replace the compressor.
  • Replaced fan motor, fan blades, and capacitor.
  • Replaced a valve.

I priced the components that we had replaced, and the approximate cost would have been $1300. So that sounds good, right? But the 20+ year old unit never got the home lower than 80 degrees, even after all that stuff was replaced, and so it had to be replaced.

The shady part? I heard from two different service people who came out essentially what I knew in my gut: the Home Warranty company was NOT going to replace our unit. Even though the contract made it appear as if they'd have to.

One service person told me that the Home Warranty company was never going to replace the unit (after having come out to our home like 5 times, and for getting the same bad temperature coming out of the register), and another person said that if he tried to get our warranty company to replace the unit, he could lose his job.

Bonus Mistake: Ignoring Your Junk Mail

As new homeowners, our mailbox was flooded with tons of offers from companies undoubtedly trying to get us to spend all of our first-time homebuyer’s tax credit. We had landscaping companies putting their business cards in our mailbox, coupons for plumbers, a new roof and purified water delivered right to our door, ads for real estate agents, churches who would like our membership, and security systems (think matrices of invisible lasers all over our property).

If you're a new homeowner, or you're looking to purchase a home, you will most likely receive many of these mailings as well.

So how do you separate the good, from the bad and the ugly? Here’s how we did it.

Coupons and Free Trial Offers

Not all of the ‘junk’ mail that has passed through our mailbox has truly been junk.

For example, we received:

  • a free one-week trial to the YMCA just a mile from where we live, which I will be taking advantage of soon
  • I had a free estimate completed on insulating our attic, and received a free hot water heater blanket for doing so. With a Lowe’s just a few miles away
  • a valuable 10% and $10 off $50 purchase coupons
  • The Houston Chronicle gave me free coupon inserts and a $1.00-a-week delivered Sunday paper subscription for 20 weeks (a savings of $15 I would have spent anyway)

These offers were all valuable to us, so make sure you open up the ‘junk’ mail and find coupons that are useful to you.

Competing Offers You Can Use to Your Advantage

Perhaps one of the most useful parts of receiving all of these unsolicited offers in the mail is that companies in the same line of work are competing for our business.

This helps us out because typically they will undercut the price of offerings of each other, making the consumer the winner in the end.

But this also helps us out because I can now use these mailings and advertisements as a negotiating tool to call up our current providers and talk them into giving us a more competitive price.

If your current cable, home phone, insurance company, etc. is more expensive than a similar offering from another company, take the opportunity to call up your provider and ask them to reduce their price…or you will walk.

They may ask you to prove this competitor’s price, in which case you will have the proof in your mailbox.

Beware: Suspicious Official-Looking Mail

Something we began receiving almost immediately were letters claiming that we had to have mortgage insurance, and that looked quite official (including our loan terms, amount, interest amount, etc.). The letters did not come from our mortgage company, but you really had to read closely to understand that, in fact, the mortgage company would not be taking your keys away if you do not purchase this insurance.

Mortgage Insurance is not to be confused with PMI, or Private Mortgage Insurance that protects the lender, and that is mandatory for those who purchase their homes with less than 20% money down. Instead, Mortgage Insurance is to protect you in case you become disabled, ill, lose your job or die, so that your mortgage will be paid off. Many times this can be covered under policies you already have, such as Life Insurance, long-term and short-term disability, etc. Make sure you look at your own plans and see what will work best for you and your family.

Another official-looking letter we received was from the “National Deed Service, Inc.” discussing our deed, the fact that it was recorded with the Harris County Recorder, and the fact that the U.S. Government Federal Citizen Information Center advises us that we should have a certified copy of this document. This company was willing to give us this for $59.50. First of all, check your closing materials because you most likely have a copy of your deed. Secondly, you can get a new copy, and have it certified by Document Pros for typically $0.50-$1.00 per page and an extra $5.00 or so (total for one document) for the certification. You need to call your County Clerk’s office, or Recorder of Deed’s Office, or the comparable agency in your own county to do so.

Bonus: Home Inspection Tips for First Time Buyers

This single mistake has cost us so much money, that I want to add a bonus section to answer a few more questions and prepare you for your own home inspection.

  • Do buyers go to home inspection?: Yes – absolutely. You want to be there, and you want to get answers to any and all questions that you have. On top of that, if you suspect your home inspector doesn’t know in-depth about a particular area, such as plumbing, you can pay a small fee to have a plumber come and inspect something to tell you what’s what.
  • Who should pay for a home inspection?: Typically, the buyer pays for the home inspection. This is in your self-interest, as you want the inspector to be working for YOU, and not for someone else (though, of course, I’m sure most home inspectors have integrity here and do their job to the best of their ability regardless of who is paying).
  • What should I expect during a home inspection?: You can expect the inspector to go about his business and fill in his inspection papers. You need to proactively talk to them and ask them questions that you have – this is your chance to get information about this house before you purchase it. A good idea is to make a list of any possible concerns you have, and address them with the inspector. If they don’t know or don’t appear to know, then go ahead and bring in a specialist for a small fee to inspect the issue and get you an answer.
  • What should I know as a first time home buyer?: You should know and at least understand a little each of the major systems of a home. That’s because these are the things that have the most ability to break down and cost you lots of money and discomfort over the years. Major systems include how your home gets cooled down (A/C), heated up (gas/electric), the duct system (how air moves throughout the home), the foundation of the home and how that’s looking, the water heater, piping, etc. For purposes of the inspection, you need to stop thinking in terms of looks, and start thinking in terms of the health of the home.

I hope you not only find these first-time home-buyer tips helpful, but that you follow them. Learn from our mistakes, and the mistakes of others to lose less money out of your own pockets over the years. And may your first home be a good one!

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Amanda L. Grossman is a Certified Financial Education Instructor, Plutus Foundation Grant Recipient, and founder of Frugal Confessions. Over the last 10 years, her money work helping people with how to save money and how to manage money has been featured in Kiplinger, Washington Post, U.S. News & World Report, Business Insider, LifeHacker, Woman's World, Woman's Day, ABC 13 Houston, Keybank, and more. Read more here.
24 replies
  1. Stefan Bradley
    Stefan Bradley says:

    You make a good point when you mention the importance of thoroughly reading your contract. I am planning on buying a new home soon. I’ll make sure that I read through the contract once I find a house that will suit my needs.

    Reply
  2. Derek McDoogle
    Derek McDoogle says:

    I like how you mentioned to do not empty your savings account and/or emergency fund to pay for the down payment. My brother told me that he has been saving money for his new home but he is looking for options. I will recommend him to read this article so that he does not go through the same mistakes and can get a better option.

    Reply
  3. Fay
    Fay says:

    Thank you for talking about how you should not empty your savings account when buying a home. My husband and I finally saved enough money to be able to buy our first home, and we need advice. I liked this article, and I am really glad I found it because it is important.

    Reply
  4. Priyanka Patel
    Priyanka Patel says:

    Hi Amanda, one of my friend is buying the home for the first time and was asking for the tips. Since I couldn’t guide him much I started looking for the tips online and that is how I came across your article. I am glad I found you article and will definitely share the same with him. Yes indeed home inspection is the most important tip as we want to assure the house is in great condition for the people who will live in.

    Reply
  5. Richard Davis
    Richard Davis says:

    I agree it is definitely important to have a home inspection to make sure that the house is in good condition and safe to live in.

    Reply
  6. Silas Knight
    Silas Knight says:

    It’s good to know more about buying a home. I like how you said that it’s good to go to the home inspection if you’re the buyer. My wife and I are hoping to buy our first house this year, so I’ll remember to have potential homes inspected and to show up to those.

    Reply
  7. Jocelyn McDonald
    Jocelyn McDonald says:

    My husband and I want to move into our first home together, and your article had some great tips to help us with this process. I liked how you said that we should have an inspection performed on the house, and we should be there for this so we can answers to any questions we might have. Thanks; we’ll keep this in mind when buying our first home.

    Reply
  8. Appaswamy
    Appaswamy says:

    Buying a home is an overwhelming experience for new home buyers. The tips you have shared in this post helps to avoid the mistakes the investors do when buying a property.

    Reply
  9. Jocelyn McDonald
    Jocelyn McDonald says:

    My husband and I want to get our first home together, and your article had some great tips to help us with this process. I liked how you said to make sure we read thoroughly through any home contract to find anything that could be an issue. Thanks; we’ll keep this in mind when shopping for a home.

    Reply
  10. Jocelyn McDonald
    Jocelyn McDonald says:

    My husband and I want to move into our first home together, and your article had some great tips we could use to buy a house. I liked how you said to avoid emptying our savings account for the down payment, as we might not have any funds in an emergency. Thanks; we’ll keep this in mind when buying our first home together.

    Reply
  11. Yoshiko Flora
    Yoshiko Flora says:

    Thanks for the heads up to only buy one new piece of appliance or furniture and head to second-hand for the rest after getting a new home. In my opinion, one can choose the home based on its size and appeal by asking a real estate agent of their suggested properties for a family. For example, if I have a family of five children and a wife, they can help recommend me to a townhouse that can let each of our children sleep in our own rooms and have a separate playroom for all of them.

    Reply
  12. Yoshiko Flora
    Yoshiko Flora says:

    I find it great that you mentioned that a homebuyer should save enough money to pay for A/C, gas, electric, ducts, and the home’s foundation. In my opinion, one can ask for the help of a local real estate agent for this. Doing this will help the buyer get expert advice from a recommended home inspection service. This, in turn, will help them comes to an informed decision of getting the house or not.

    Reply
  13. Texas Heat
    Texas Heat says:

    I had AHS 11 years ago, and when my AC wouldn’t cool enough, the first guy they sent out said I would need new compressor. But, that never happened, because, *at no cost to me*, AHS sent out another guy (whose job it was to prevent a new compressor if at all possible). So he showed me how to electrically remove the inside fan motor, and there was a buildup on the fan blades that I would need to scrape off ( I used a toothbrush and solvent to do that). Then, I would spray a cleaner onto the “radiator like fins” where the inside fan motor blew air.

    I did all that. It took over two hours of painstaking scrubbing on the motor to get the blades clean. But after putting it all back together, I did get cooler air and more air blowing. But this AC system was already close to 30 years old, and had probably never been cleaned by the landlord. Well, I was the new owner, and, these are thing you have to do with an “older” home.

    BTY, capacitors for the outside fan motors aren’t that expensive if you buy them in advance, over the internet… mine around $10. If you hear that “hum” but no outside fan motor blowing, then replace your capacitor. Buy a couple in advance, as the older capacitors last much longer, and the newer capacitors may give you five years. But if you let the AC company replace it, they will charge you $50 for the capacitor, plus the service call.

    Reply
  14. Thankfully Thrifty
    Thankfully Thrifty says:

    I relate all too well!! Only it didn’t work out so well for us. American Home Shield (AHS) refused to replace our system because something could always be band-aided… grrr. We had them out 3 times last June also. Eventually it worked enough. But still the system was 25 years old and needing to be replaced. We did not renew our policy because we knew they wouldn’t do anything. You are EXTREMELY lucky!! We bought a new system ourselves this year. I was thrifty though and took several bids!

    Reply
  15. BluSky
    BluSky says:

    Okay, he came out today and replaced the capacitor under warranty which took care of the electrical hum and then informed me that I had freon leak in some tubing they ran back in 2006 that was subsequently given a salt water bath by Ike and is rather corroded now. He didn’t have the tubing today so we’re going to meet up in two weeks when I am able to come back down here.

    Reply
  16. BluSky
    BluSky says:

    Sounds like you had as much fun with your home AC as I did the one in my car last month. Not to worry though, when I got to the beach this weekend, I got the distinct feeling right away that my unit that isn’t even a year old wasn’t blowing cold air. Sure enough, it wasn’t. I turned it on again the next day only to greeted by this electrical humming noise. That made me mad because the unit is basically a $2,600 piece of junk. They already had to replace the compressor in it once. I was disappointed because this is the same company that I had such good luck with after Rita. I’ll keep you posted on how it turns out.

    Reply
  17. Ruth
    Ruth says:

    “You are getting at $150 mail in rebate” That was the statement I got when I told him it was supossed to be a $99 install. Though the salesman never filed the paperwork and I had to fight with them to get my rebate.

    The $99 install apparently included a motion detector, a door sensor and 2 window sensors (or something like that). Even though my house was prewired, we didn’t have a phone line, so we had to get the GSM technology ($350) that works based on gsm signal rather than a phone line, another door sensor for the back door, and I think around 10 more sensors for the windows (at $10 each.)

    Later on with this company I had a problem with their “pet motion detector” I was told by the sales person that you had to have 100lbs of body heat in order to set off the motion detector and that my 9lb cat wouldn’t ever set it off. LIE!! After weeks of arguing, 2 service calls, and the cops comming to my house 3 different time (good thing for alamr permits) the company left the detector installed but refunded my money for it.

    The saddest part of the entire experience is I am very budget minded, I *did* my research, I got quotes from several different companies ($99 installations DON’T EXIST) and had decided not to go with an alarm. That caused a huge fight, and I gave in and got the alarm. However, all that being said, having an alarm does give me some piece of mine when I am home alone. Chalk it up to a learning experience and used some of the tax credit on it. 🙂

    Reply
  18. Amanda L Grossman
    Amanda L Grossman says:

    Hello Ruth! Thanks for your comments. We did not receive the HCAD one…but that doesn’t mean it’s not coming:). Also, that is horrible on the installation! What did the company say when you reminded them that it was a $99 installation?

    Reply
  19. Ruth
    Ruth says:

    Oh another thing to be leery of is the “$99 installation” for different security companies. This one I learned from experience… The $99 installation turned into a $760 system on my prewired house. And, it was something that *I* didn’t even want in the first place (but that is an entirely different issue). Pretty much convinced that no matter what company, there is no such thing as a “$99 installation”

    Reply
  20. Ruth
    Ruth says:

    Congrats on the house! One of suspious looking letters I got was something that looked like it was from Harris County Apprasial District dealing with homestead exemption. After reading it closely, and then having someone else read it just to make sure, it turns out that it was from a company that wanted to charge me $35 to “help me file” my homestead exemption. Definetly not necessary, HCAD website has the simple form that took all of 5 min (if that) to fill out and mail in.

    Reply
  21. Amanda L Grossman
    Amanda L Grossman says:

    Hi BluSky: Nope–before the legislationw as passed, you used to have to pay back up to a $7,500 over the course of several years. But one of the effects of the recession was the passing of this $8,000 homebuyer’s tax credit–we received it, and we do not have to pay taxes on it either. Can’t get much better than that!

    Reply
  22. Budgeting in the Fun Stuff
    Budgeting in the Fun Stuff says:

    Great post!

    We had the same stuff and dealt with it almost the exact same way. I personally don’t mind junk mail too much simply since some great deals are mixed in as well.

    I hope the curb numbers people hit my neighborhood soon…it’s hard to see our numbers at night.

    Those official-looking mortgage forms are the most annoying!

    Reply

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