Buying a first home can be thrilling, but don’t let that excitement derail your finances. Learn from the mistakes of other first-time homebuyers before signing a home purchase agreement.

Mistake #1: Buying when you should be renting — There are two main times when renting may be better than buying. One is if you think you’ll move again soon. The other is if home prices in your area have skyrocketed in comparison with property rental rates.

Mistake #2: Not budgeting for a home purchase — When budgeting for a home, many financial advisors advocate the 50/30/20 rule for your overall finances: 50% of your income for fixed costs that don’t vary much each month, like mortgage or rent, utilities, car payments, and monthly dues or subscriptions; 30% for variable expenses, like groceries, gas, entertainment and hobbies; and 20% toward long-term financial goals, such as retirement plans, an emergency fund or travel.

Mistake #3: Not shopping for financing — It’s up to you to determine the lowest-cost loan option that delivers the best value and customer experience. The best time to line up your mortgage financing is before you start shopping for a home, not after.

Mistake #4: Forgetting about added costs — The acronym PITI stands for the four typical parts of a monthly mortgage payment: principal, interest, taxes and insurance (often both homeowner’s insurance and private mortgage insurance). When buying a home, factor in all of these costs. You’ll also need to be prepared for transactional costs. Typically, homebuyers pay approximately 3% of the purchase price of their home in closing costs. On a $150,000 home purchase, that could add $4,500 to final costs.

Mistake #5: Skipping or hurrying through the home inspection — For a few hundred dollars (typically), a professional home inspection is a relatively cheap way to ensure your major purchase is soundly built and up to date. While your real estate agent might suggest a home inspector they trust, keep in mind that you can do some research on your own or get a recommendation and hire an inspector yourself.

Mistake #6: Immediately adding new furnishings — Don’t feel like you have to outfit every room in your new home with new stuff. Add new furnishings gradually, as your budget can afford. That way you’ll have a better sense of your new home’s style, too.

At Navy Federal Credit Union, we know the rewards—and challenges—of buying a first home. We’re here to support you, every step of the way.