For many first-time buyers, the path to homeownership feels like navigating a system full of hidden rules, unwritten expectations, and financial traps.
Jeremy Davis, president of mortgage at Southern Bancorp, a certified community development financial institution (CDFI), told Newsweek that the core issues often stem from a lack of access rather than a lack of ability.
„I work with first-time buyers, working families, and communities that were never taught the ‘rules of the game.’ Most mistakes aren’t about intelligence. They’re about access, timing, and bad advice passed down like folklore,” Davis said.
Below are the pitfalls that trip people up, and why they matter, according to Davis.
1. Skipping Pre-Approval
According to Davis, failing to secure a pre-approval before shopping is one of the most costly missteps. „This is the fastest way to lose leverage before the game even starts,” he said. Buyers often assume that browsing listings with a general budget in mind is harmless, but he warns that „too many buyers start shopping with a vague online estimate and optimism. Sellers don’t negotiate with optimism. They negotiate with certainty.”
Without a pre-approval letter in hand, he said, „your offer is weaker, even if it’s higher, you lose time, and time kills deals,” and the emotional fallout can be just as harsh. Shoppers risk „falling in love with a home you can’t actually afford, which is emotionally and financially brutal.”
Davis emphasized that pre-approval serves multiple protective purposes. „Pre-approval is not about locking you into a loan. It’s about knowing your real buying power, spotting issues early, and showing sellers you are serious. In competitive markets, pre-approval isn’t optional. It’s table stakes,” he said.
2. Underestimating Closing Costs
Even buyers who plan carefully for a down payment often stumble at the finish line. „This is where budgets quietly blow up at the finish line,” Davis said. „Buyers focus on the down payment and forget the rest of the equation. Closing costs can run 2 to 5 percent of the purchase price, and that surprises people every single day.”
Among the commonly overlooked items, Davis pointed to „title and settlement fees, appraisals and inspections, prepaid taxes and insurance, escrows that hit all at once.” When those costs aren’t anticipated, the fallout can be severe. „The consequence is not just stress,” he said. „It’s last-minute scrambling, draining emergency savings, or worse, deals falling apart days before closing.”
But the solution doesn’t require guesswork. „The fix is simple but disciplined,” he said. „Budget for closing costs upfront, ask for a full estimate early, and explore grants or assistance programs before you make an offer, not after.”
3. Allowing Emotions to Drive the Decision
Emotion is unavoidable in the home-buying process, but Davis argues it shouldn’t steer the ship. „Emotion is human. Overpaying because of it is optional,” he said. „Buying a home is personal. That’s the problem.”
He’s seen buyers „bid far above value because they ‘felt it’” and „waive inspections they absolutely needed,” along with stretching their budgets „so thin that homeownership became a burden, not a blessing.”
According to Davis, the key is grounding the decision in discipline. „When emotions run the show, buyers overpay today and regret it tomorrow. The antidote is structure. Set your walk-away number in advance. Trust the data. Lean on professionals who will tell you the truth, even when it’s uncomfortable. A good deal should still feel good five years from now.”
A Larger, Systemic Issue
Beyond individual missteps, Davis believes the real roots of buyer confusion run deeper. „The biggest mistake I see isn’t tactical—it’s systemic,” he said. Many buyers were „never taught how mortgages work, how credit is evaluated, or how to plan for long-term ownership costs. When education is missing, mistakes multiply. That’s why access to responsible guidance, not just cheap rates, matters so much.”
Ultimately, his message is that preparedness—not aggressiveness—is what gives buyers power. „Homeownership should build wealth, stability, and dignity. When buyers are rushed, under-informed, or emotionally pressured, the system fails them,” he said. „The smartest buyers aren’t the most aggressive. They’re the most prepared.”
He believes when „buyers are educated early, supported honestly, and treated with respect, homeownership becomes what it was always supposed to be—a foundation, not a gamble.”
