When it comes to buying a home, securing a mortgage is one of the biggest financial decisions you'll ever make.

While it may seem straightforward, many homebuyers make critical mistakes that can lead to higher costs, stress, and regret in the long run.

Not Shopping Around for the Best Rate

One of the most common mistakes home-buyers make is failing to shop around for the best mortgage rate. Many buyers go with the first lender they meet or simply accept the rate their bank offers without comparing options. This oversight can cost you thousands of dollars over the life of the loan.

Mortgage rates vary widely between lenders, and even a small difference in the interest rate can add up significantly over time. A 0.5% lower rate can save you tens of thousands of dollars in interest payments. Greg McBride, chief financial analyst for leading consumer financial services company, stated, "Conducting an online search can save thousands of dollars by finding lenders offering a lower rate and more competitive fees. Compare offers from at least three — and preferably five — lenders."

Overlooking the Importance of Your Credit Score

Your credit score plays a major role in the type of mortgage you qualify for. A low credit score can result in higher interest rates or even cause your loan application to be denied. Unfortunately, many home-buyers don't realize the importance of their credit score until they start the mortgage process. Lenders use your credit score to determine how risky you are as a borrower. A higher score often translates to better rates and more favorable terms, while a lower score can lead to higher costs over time.

Not Understanding the Total Cost of Home-ownership

Many home-buyers focus only on the monthly mortgage payment and neglect to consider the other costs associated with home-ownership. These can include property taxes, homeowners insurance, maintenance, utilities, and Home Owners Association (HOA) fees, among others. The total cost of owning a home can be much higher than the mortgage payment alone. Failing to account for these additional expenses can lead to financial strain and unexpected surprises.

Choosing the Wrong Type of Mortgage

Not all mortgages are created equal. There are many types of mortgage loans, including fixed-rate, adjustable-rate, and interest-only mortgages. Choosing the wrong type for your financial situation can have long-term consequences, such as paying more in interest or being locked into unfavorable terms. The type of mortgage you choose will determine the structure of your payments, the interest rate, and how long you'll be paying off your loan.

Greg McBride warns, "Don't fall into the trap of using an ARM (Adjustable-Rate Mortgage) as a crutch of affordability. There is little in the way of upfront savings, an average of just one-half percentage point for the first five years — but the risk of higher rates in future years looms large."

Failing to Factor in the Long-Term Impact of Your Loan Terms

Many buyers make the mistake of focusing only on the short-term aspects of the loan, like monthly payments, without considering the long-term financial implications. Loan terms, such as the length of the mortgage and the type of interest rate, can dramatically affect the total cost of your loan. While a 30-year mortgage offers lower monthly payments, it may cost you more in interest over time compared to a 15-year mortgage.

Not Getting Pre-Approved Before House Hunting

A common mistake many first-time home-buyers make is skipping the pre-approval process. Without pre-approval, you're essentially shopping for a home without knowing exactly how much you can afford to borrow. This can lead to disappointment if you find a property you love but can't afford, or if you fail to meet the seller's expectations. Getting pre-approved for a mortgage gives you a clear understanding of your budget and shows sellers you're a serious buyer. It can also expedite the buying process by making your offer more competitive.

Avoiding the above common mortgage mistakes can make the difference between a smooth home-buying experience and a financially stressful one. By shopping around for the best rate, understanding the total cost of homeownership, and choosing the right mortgage type, you can set yourself up for long-term financial success. Remember that securing a mortgage is not just about getting a loan—it's about choosing the right one for your current and future needs.