Buying a home is one of the biggest financial decisions you’ll ever make—and for most people, that means taking on a mortgage. While it may seem straightforward (“find a house, get approved, pay monthly”), the truth is that a mortgage involves dozens of decisions that can either set you up for success—or cost you thousands over time.
To help you avoid costly pitfalls, here are the top 10 mortgage mistakes to avoid, and what to do instead.
Not Checking Your Credit Score Early
The Mistake: Many buyers wait until they’re ready to buy a house to check their credit score.
Why It Matters: Your credit score heavily influences the interest rate you qualify for. A difference of even 0.5% in your mortgage rate could cost you tens of thousands of dollars over the life of the loan.
What to Do Instead:
- Check your credit score at least 6 months in advance
- Pay down debts and dispute any inaccuracies
- Don’t open new credit lines right before applying for a mortgage
Skipping Pre-Approval
The Mistake: Starting your home search before getting pre-approved.
Why It Matters: Pre-approval gives you a clear idea of what you can afford and makes you a stronger buyer when making an offer. In competitive markets, sellers often won’t even consider buyers without it.
What to Do Instead:
- Get a pre-approval letter from a lender before touring homes
- Make sure it reflects your actual budget, not just your max approval
- Understand that pre-qualification is not the same as pre-approval
Borrowing More Than You Can Afford
The Mistake: Taking the maximum loan amount offered, even if it stretches your budget.
Why It Matters: Lenders approve you based on gross income, not your day-to-day living expenses. Overextending can lead to stress, missed payments, and long-term financial strain.
What to Do Instead:
- Stick to the 28/36 rule: Spend no more than 28% of gross income on housing, and 36% on total debt
- Use a detailed budget to calculate what you’re comfortable paying monthly
- Remember: Just because you can doesn’t mean you should
Not Shopping Around for a Lender
The Mistake: Accepting the first mortgage offer you receive.
Why It Matters: Different lenders offer different interest rates, fees, and terms—even for borrowers with similar profiles.
What to Do Instead:
- Get at least 3–5 quotes from different lenders or brokers
- Compare interest rates, origination fees, and closing costs
- Consider both national lenders and local credit unions or banks
Ignoring the True Cost of the Mortgage
The Mistake: Focusing only on the monthly payment.
Why It Matters: Your mortgage includes more than just principal and interest—there are also property taxes, homeowner’s insurance, mortgage insurance (if applicable), and potential HOA fees.
What to Do Instead:
- Use a mortgage calculator that includes all costs (PITI)
- Ask your lender to explain your full loan estimate, including escrow
- Understand how taxes or insurance might increase over time
Making Major Financial Changes Before Closing
The Mistake: Switching jobs, buying a car, or opening a new credit card after you’ve been approved.
Why It Matters: Lenders do a final credit and employment check before closing. A big change could delay or derail your loan.
What to Do Instead:
- Wait until after closing to make any large purchases
- Avoid financing furniture, cars, or other big-ticket items
- Don’t switch jobs without speaking to your lender first
Choosing the Wrong Type of Mortgage
The Mistake: Picking a mortgage based only on the monthly payment or rate.
Why It Matters: There are many types of loans—conventional, FHA, VA, USDA, adjustable-rate, and fixed-rate. The wrong one could cost more or not match your long-term plans.
What to Do Instead:
- Ask your lender to explain all available loan types
- Consider your future plans (e.g., how long you’ll stay in the home)
- For example: An ARM might offer lower payments now but adjust upward in 5 years
Focusing Only on Interest Rate (and Ignoring APR)
The Mistake: Shopping by interest rate alone without understanding the APR.
Why It Matters: The interest rate reflects just the cost of borrowing. The APR (Annual Percentage Rate) includes interest plus lender fees, discount points, and other costs, giving you a more complete picture of what you’ll actually pay.
What to Do Instead:
- Always compare APR, not just the interest rate
- Ask your lender for a full breakdown of fees included in the APR
- Understand that a slightly higher rate with lower fees may cost less overall
Not Locking in Your Rate
The Mistake: Letting your mortgage rate “float” while interest rates are rising.
Why It Matters: Even a small increase in rates can significantly change your monthly payment and total loan cost.
What to Do Instead:
- Lock your interest rate once you’re under contract (especially in a volatile market)
- Ask your lender if they offer a “float-down” option in case rates drop
- Monitor the bond market or ask your agent for timing advice
Forgetting About Long-Term Plans
The Mistake: Getting a mortgage that only works for your current life.
Why It Matters: Your housing needs and financial situation may change. If you’re stuck in the wrong loan—or pay hefty penalties to get out—it can be costly.
What to Do Instead:
- Choose a loan that aligns with how long you plan to stay in the home
- Ask about prepayment penalties, refinancing rules, and flexibility
- Consider future plans: Will your family grow? Could your income change?
Bonus Mistake: Not Asking Questions
The Mistake: Feeling overwhelmed and just signing whatever is put in front of you.
Why It Matters: This is a major financial commitment. Not understanding what you’re signing can lead to missed fees, unexpected changes, or unfavorable terms.
What to Do Instead:
- Ask your lender or real estate agent to explain anything unclear
- Don’t be afraid to slow things down—this is your money
- Remember: A good lender is a teacher, not just a salesperson
Mortgages are complex, but they don’t have to be confusing. The more informed you are, the better equipped you’ll be to avoid common pitfalls and choose the best loan for your life and future.
Avoiding these mistakes can save you:
- Thousands of dollars in interest
- Extra stress at closing
- And the regret of locking yourself into a bad loan
Need Help Making Smart Mortgage Choices?
Whether you’re a first-time buyer, refinancing, or upgrading, partnering with a trusted lender and real estate professional can make all the difference. Ask questions, plan ahead, and make decisions that will support your long-term financial goals—not just your next 30 days.
