3 House-Hunting Mistakes to Avoid in Today's Market

Today's housing market is tough to navigate. Here are three mistakes to steer clear of while you search.

From a mortgage rate perspective, now's a great time to buy a home. Mortgage rates are sitting near historic lows, so you have a prime opportunity to lock in an affordable home loan.

But from an inventory standpoint, now's a terrible time to look for a home. Though housing inventory rose in June compared to May, there's still nowhere near a healthy level given buyer demand. As such, home prices are still going up, and buyers are still having to compete with each other in the form of bidding wars.

Given how tight the real estate market is, it's important to approach your home search the right way. And that means steering clear of these major mistakes.

1. Not being open to up-and-coming neighborhoods

When you embark on a home search, you may be inclined to focus on specific neighborhoods -- ones with highly rated schools or amenities like restaurants and cafes. But you might regret overlooking up-and-coming neighborhoods.

The upside of buying a home in a growing neighborhood is that you'll generally have an opportunity to pay a lot less for that property. Or you might get a lot more living space for your money. Then, if demand to live in that neighborhood soars over the next few years, you could end up in a prime position to profit big time by selling your home. And even if you don't want to sell, if the value of your property rises, you'll have more options to borrow against your home as needed.

2. Not being flexible on upgrades

During your home search, you may be inclined to favor homes that are already updated. But that's a choice you might regret. While you can't necessarily turn a two-bedroom house into a four-bedroom -- or convert a tiny backyard into a sprawling property -- you can turn an outdated kitchen into a modern one, or renovate an old bathroom.

When there's ample inventory to go around, you can afford to be picky about the type of home you buy. But in today's market, you may have to make some compromises, and that could mean buying a home you have to renovate.

Incidentally, buying a home that's not fully upgraded could mean paying a lot less for it. And then you'll get to update that home to suit your style, not that of the previous owner.

3. Not getting pre-approved for a mortgage

When you get pre-approved for a mortgage, you're not officially guaranteed a home loan. But a lender looks at your finances and determines what amount you're eligible to borrow based on your income and other factors. And that's an important number to have.

If you don't get pre-approved for a mortgage, you could waste weeks looking at homes that are out of your price range. On the other hand, if you know what mortgage amount you're eligible for, it could help you narrow down your search -- and make you more appealing to sellers.

It's not easy to find a home these days, so give yourself as much of an advantage as possible. Avoiding these mistakes could be your ticket to a successful home search.