Buying your home is a moment you will never forget. But what happens when you look back after a few years of owning a home and think, “I wish I’d done things differently?” Let’s break down the biggest mistakes we see people make when buying so you can avoid regret and love being a homeowner!
Not Sticking to a Budget
Just because you get approved for $500,000 doesn’t mean you feel comfortable spending that much. People who buy over the amount they budgeted for tend to regret it. Sticking to a budget gives peace of mind and allows you to prepare for emergencies, such as home repairs.
Many home buyers regret not fully understanding and being financially ready for home repairs. Unlike renting, where the property owner is responsible for most repairs that take place, once you own a home, this cost falls to you. By building a space in your budget to save for a rainy day, you’ll be less likely to have to dip into savings or feel strapped financially.
This also includes your down payment. Many lenders prefer 20% down. Not only does this lower your monthly payment and help you avoid PMI (Private Mortgage Insurance), but you build equity in your home more quickly.
However, it isn’t the ONLY option. For first-time home buyers, a down payment of 10% is sufficient and can give you more wiggle room when adjusting to the costs of homeownership. Remember, owning a home, no matter your down payment or interest rate will give you more opportunity to build wealth than renting will.
Pre-approval and Loan Programs
A pre-approval is more than necessary. Making sure you have already solidified the money for a mortgage makes you look better to home sellers and increases the chances of your offer being accepted. Certified Home Buyer by Churchill Mortgage is considered the gold standard of pre-approvals, positioning you similarly to a cash buyer. It also does most of your financial verification up front, keeping the process simple and stress-free.
You also want to work with your lender to know every home loan option available. Whether it's a jumbo loan, an FHA, or even our Rate Relief program, you deserve the smartest mortgage plan for YOUR goals!
Credit Score
Your credit score is one of the factors that lenders look at when financing a home loan. A low credit score can cause a high interest rate, or even disqualify you from getting a loan.
Make sure you're working toward paying off your credit card balances (if you have any), that you are up-to-date on student loan and car payments, and you don’t have any outstanding medical bills, etc. Some homebuyers feel they made a mistake in not working on their credit before taking on a mortgage.
If you’re unsure of the health of your credit, you can get a free yearly report here. This will give you a starting point and allow you to see how your score may impact your buying power.
However, not everyone has a credit score. If you have a credit score of zero (this is not the same as a low credit score), you may qualify for a no score loan. Your Home Loan Specialist can walk you through this.
Not Locking in an Interest Rate
Not all mortgages are created equally. Interest rates fluctuate, and because the real estate market is so competitive, getting an offer accepted may take longer than expected. Locking in your interest rate can help. At Churchill we offer our Rate Secured program, where you can cap your interest rate for 90 days (about 3 months), giving you time to find a home that’s right for you. And if you don’t find a home in that 90-day period, you can reset the rate and try again!
Forgetting to Research the Neighborhood
Another home buyer mistake is forgetting to research the neighborhood you will be living in. Yes, it may have your favorite restaurant close by, but will it work for you or your family day to day? For example, if you have a new baby, you may not want to buy a home on a noisy street. Get to know the neighbors and see what the city or neighborhood is like before investing hundreds of thousands of dollars!
Not Choosing the Right Team
Your Home Loan Specialist and Realtor will be your pillars during the home buying process. You deserve to have people who are on your side and advocating for you. Your Home Loan Specialist should be there to advise and educate you about everything regarding your finances. Your Realtor should help you understand everything about the homes you’re looking at. Your Realtor should also be getting you the best deal possible on the home, while your Home Loan Specialist should be getting you the best deal possible on your mortgage.
At Churchill Mortgage, we strive to help in any way we can. From recommending a Realtor to helping you plan for a down payment, to securing a mortgage at the best interest rate possible, we are always on your side. If you have any questions or are looking to buy, give us a call. We can’t wait to work with you!