3 Home-Buying Don'ts (and What You Should Do Instead)

You will regret these moves.

I've been accused of overthinking things, and while this has led to many sleepless nights and anxious days, I think it's a good quality to have when it comes to certain experiences, such as preparing to buy a home. I'm still at least a year away from starting the process in earnest, but that hasn't stopped me from thinking, dreaming, and getting my finances in order. I paid off all my debt in 2022, and I'll be spending 2023 saving money for a down payment.

If you're plotting your own future as a homeowner, here are three home-buying don'ts to avoid, as well as the moves to make instead. After all, a home is likely to be the most expensive purchase you'll ever make, so it's important to tackle it in such a way that you succeed.

1. DON'T buy when your life isn't settled

I've been down the homeownership road before, and it was a big mistake for a number of reasons, most notably because my life wasn't in the right place for me to buy a home. I was very young, new to a career that ended up seeing me move thousands of miles for positions in it, and I was nowhere near mature enough (or financially prepared enough) to handle the requirements and costs of homeownership. I wish I had kept renting instead, it would have saved me a lot of money, a damaged credit score, and so much worry.

DO continue renting until then

I am a renter now, and have been one in multiple states and cities since my house debacle more than a decade ago. I've made my peace with it, because not only is it cheaper than owning a home, it has been a much better fit for my life. Every time since I've needed to move (usually for a job), it was easy to break my lease. I didn't have to sell a house and potentially take a loss on it. Renting can come with some pretty cool perks too.

2. DON'T pretend your credit score is fine

If you're hoping to buy soon, now is not the time to go ostrich and stick your head in the sand. You will want a clear picture of your finances as a whole, including and especially your credit score. After all, lenders are going to take a deep dive into your finances and use that information to figure out what interest rate to offer you on a mortgage. The better your score, the lower that interest rate will be. You want to check things out before they do.

DO work on improving it as much as you can

You can access your credit score through credit card companies you have accounts with, and likely also your bank. You can sign up for a credit monitoring service to keep tabs on your score, and until the end of 2023, you even have access to free weekly credit reports. Now is the time to make some changes to improve your credit, in advance of contacting mortgage lenders. To start, if you've made some late payments, resolve to make them on time going forward -- payment history is 35% of your credit score. Look for errors on your credit report (like accounts that aren't yours, or delinquencies that should have fallen off your report by now); if you have them removed, your score will rise. And pay down debt, if you can. Your score will rise as your credit utilization ratio falls.

3. DON'T make the bare minimum down payment

Chances are, the hurdle of saving for a down payment is weighing heavily on your mind. While you can get a conventional mortgage loan with as little as 3% down, and take advantage of federal programs that may require 0% down (such as a VA loan), it is likely better to save more for a down payment.

DO put down as much as you can

I'm not going to tell you that you must make a 20% down payment to buy a house. If you live in an expensive area, that could take years to save, and of course, you want to be able to get on the property ladder sooner rather than later. However, the more you can put down, the better off you'll be, for two reasons:

1. The lender won't be taking as big of a risk on you, and so it may offer you a better interest rate.
2. You won't have to pay mortgage insurance for as long (if you're making that 20% down payment, you can avoid it altogether). Once you reach 20% equity in your home with a conventional mortgage loan, private mortgage insurance (PMI) can be removed. And if you buy with an FHA loan and put at least 10% down, your mortgage insurance premiums (MIP) can be canceled after 11 years.

Buying a home is both scary and exciting, and if you avoid these don'ts (and focus on the dos instead), you'll have a greater chance of success in the process.