3 First-Time Buyer Mistakes I Made (and Will Avoid Next Time)

Every mistake can be a learning experience.

Being able to learn from past mistakes is truly the silver lining to making them in the first place. This is especially the case when it comes to money management, and I'm willing to bet that everyone has at least one major regret regarding their finances. For me, that is definitely buying my first house, which unfortunately ended in a short sale. (While this was less destructive to my credit than a foreclosure would have been, it still involved a pretty significant credit score hit that stayed with me for seven years).

Hindsight is always 20/20, and more than a decade later, I can look back on the smaller mistakes that led to this big one and resolve to do better when I buy a home again. Here's what they are.

1. Falling for the myth that 'renting is throwing money away'

This was the first step that led to me buying my first home. I moved around a lot as a kid, going from rental house to rental house, in multiple states and finally all in the same town. It seemed to me as if our family truly was throwing our money away, while I visited friends from school whose parents owned their homes. In some cases, my friends got to live in the same house for their entire childhood. When I got encouragement and financial help from my family, it seemed like a great idea to sign on for a mortgage -- after all, I was tired of moving and tired of "throwing money away."

Renting shouldn't be viewed that way, though. You're paying for a roof over your head, and that's worthwhile. And owning a home isn't the only way to grow wealth. You could conceivably invest the money you save by renting and still come out ahead. Since my misadventure with homeownership, I've rented in a few more locations, and I've been happy to make that rent payment every month. That's because I know that each time I move again, I'm not faced with the expensive and possibly difficult prospect of selling a house.

2. Living paycheck to paycheck as a renter

At the time when I bought my first house, I was living paycheck to paycheck after several years of scraping by as a college and then graduate student. Since I was already living up to my means, there was no way I was financially prepared to be a homeowner. I didn't dig deep into the numbers or truly comprehend what components went into a mortgage payment. All I knew was that the monthly payment on my home would be just a couple hundred dollars more than my rent had been, and it looked as if I could maybe afford that.

Just two years later, I was laid off from my job and was immediately unable to afford those payments. I had no emergency fund or any real savings of any kind. It was a huge mistake to buy under such circumstances.

3. Not understanding the actual costs of owning

In addition to not actually realizing how a mortgage payment differs from rent, I also had no idea how much additional money it costs to be a homeowner. I was extremely lucky that nothing went wrong with my house in the time I lived there. I had been told by the home inspector that the roof would need to be replaced in the next few years, but it didn't come to pass while I lived under it. I would have needed to immediately go into debt to pay for any repairs the home might have needed. Now that I'm older (and wiser, I'm hoping), I will make it a point to create a homeownership budget and have savings dedicated to any repairs or maintenance a house might need.

Growing older gives us the chance to put into practice the lessons we learn from our mistakes. Now that I can look back on that first home purchase (and try not to cringe too hard), I know what not to do next time.