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5 First-time Home Buyer Mistakes to Avoid

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Looking for a new home is an exciting time! If you’re buying a home for the first time, it’s important to know the 5 most common mistakes made during the home buying process. More importantly, it’s vital that you know how to AVOID these mistakes!

1. Buying More House Than You Can Afford: It’s hard not to get caught up in the emotion of buying a new home. If you haven’t already applied for a mortgage, you’ll soon find out that you can qualify for a house payment that’s much larger than what you can really afford. This doesn’t make sense for several reasons. First, you’ll be strapped for cash every month and second, your home will become a burden instead of a blessing—not a fun situation to be in!


How to Avoid This Mistake: Calculate the price of your monthly payment based on your monthly after-tax income so you don’t bite off more than you can chew. It’s not fun to be house poor! Our affordability calculator can help you figure out affordable home prices and the loan terms for your situation to help you get started on the right path. Once you’ve got this ballpark number, it’s best to talk to a Home Loan Specialist to get Homeownership Strategy Plan (it’s quick and simple). 


2. Emptying Your Savings Account: This is super risky. You don’t want to empty your savings account to cover your down payment and closing costs. It’s best to keep 3-6 months of living expenses in your account to cover any emergencies that may come up and keep your finances from spiraling out of control.


How to Avoid This Mistake: Do the math. Multiply the total mortgage amount by the percentage you would like to put down on the purchase of a home—this gives you a savings goal to work toward! So, if you buy a home for $325,000 and you want to put 10% down, your goal would be to set aside $32,500 for a down payment.


3. Thinking You Have to Put 20% Down: A higher down payment is always a good thing, but it might not always be realistic in today’s market. Don’t shy away from getting a mortgage just because you’re uninformed! You still have plenty of opportunities if 20% down is not an option.


How to Avoid This Mistake: There are about 2,500 Down Payment Assistance (DPA) programs available across the country to qualified home buyers. These programs vary from state to state and typically have criteria related to specific loans such as VA, FHA, and USDA. Be sure you know the full spectrum of the DPA you’re considering. As part of your home shopping process, it’s important to research DPA programs and know the total cost of each option. Your Home Loan Specialist is always available to discuss your options to see if a specific program is a good fit for your situation and your long-term financial goals.


4. Being Careless with Credit: Another mistake first-time home buyers make is to not pay attention to what’s going on with your credit score. If you’ve worked hard to make sure your credit score is 0, it’s always good to check in from time to time to make sure it’s staying that way. And if you’re trying to repair your credit, you need to know if you’re headed in the right direction!


How to Avoid This Mistake: Check your credit score before meeting with your Home Loan Specialist so you can clear up and errors or concerns that could negatively impact your score. Once you apply for a mortgage, don’t apply for any new credit, and make sure you make all your payments are paid on time since details about your credit history typically include late or missed payments. So, wait to buy the new furniture or appliances until after you close on your home. Also, communicate with your Home Loan Specialist in case you need to provide additional documentation or information to speed up the home loan process.


5. Shopping for a Home Before Applying for a Mortgage: Many first-time home buyers make the mistake of looking at homes before talking to a lender. You want to have as much negotiation power as possible, especially if you live in a competitive housing market.


How to Avoid This Mistake: Many home buyers will get pre-qualified or pre-approved. The next step up from that is to become a Churchill Certified Home Buyer. As a Certified Home Buyer, you can shop smarter for your home by becoming pre-underwritten for your home loan before you even go under contract. It’s the next best thing to paying cash for your home and helps set you for home buying success to increase your negotiating power with a quick close.


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