Buying your first home is a huge life milestone that helps you build wealth and manage your finances appropriately if done correctly. During the process, you’ll learn a ton about mortgages and investing and will tour dozens of homes — some a bitter fit than others. By the end of the search, you’ll find the perfect home to move into that fits you and your family’s long-term needs.

As you go through the process of buying your first home, you’ll want to avoid these common mistakes. If you need a more thorough education, we suggest asking your loan officer about what resources and short courses are available to help.

Mistake No. 1: Only saving money for the down payment

Although saving for a down payment of around 3% to 20% of the home’s value is necessary, it’s not the only goal you should be aiming for. It’s true that a larger down payment can secure in getting you a better interest rate, but you’ll want to have money left over for closing costs, furniture, moving costs, yard care and more.

Closing costs range from about 3% to 6% of the loan amount, so if you’re buying a $500,000 home you’ll be paying about $7,500 to $15,000 on closing fees.

Mistake No. 2: Buying on the extreme upper end of what you qualify for

Through the pre-approval process, you’ll receive a scale of how much you should spend on a home based on your current income. Although receiving a mortgage pre-approval for a larger loan than you expected is a thrilling moment, that doesn’t always mean you should spend on the extreme upper end.

When in doubt, follow the 28/36 rule as a guiding point. Your mortgage payment should not be more than 28% of your monthly pre-tax income and 36% of your debt-to-income ratio. It’s also recommended to save 20% of your after-tax income to help build a stable and healthy financial future.

Mistake No. 3: Misinterpreting renovation and repair costs

When purchasing a home that needs a bit of extra TLC, many homebuyers are blindsided by high repair and renovation costs. In order to avoid this, be sure to get quotes from several contractors and create a financial plan accordingly. Since you own the property, you must plan for regular maintenance and repair costs. As a general rule of thumb, annual home maintenance costs around 1% to 4% of your home’s value per year.

If you’re looking for additional mortgage advice, be sure to check out the expert team at Allied Mortgage. Mortgages can be overwhelming, but with Allied, you have an Ally to guide you through it! Click here or call 877.448.2745 to get started.