Home Buyer Starter Kit

Welcome to Your Home Buying Power Guide

Most first-time buyers stop before they even start. And it’s no surprise — the housing market is full of negative headlines, mixed advice, and overwhelming data.

But the fact that you’re here already puts you ahead. You’re taking the time to prepare and learn, which means you’ll step into this process with more confidence than most.

That’s why we created this guide. We’ll walk with you through the home buying process, step by step, in plain language, with tips you can actually use. By the end, you’ll not only feel prepared — you’ll be able to explain it to friends and family who are thinking about buying, too.

What We'll Cover Together

In this guide, we'll cover:

• Break down who’s involved (and why they matter).
• Outline the steps to buying a home from start to finish.
• Show you what to expect with documents and timing.
• Share advice to help you avoid common mistakes.

Who's Who in the Home Buying Process

Behind every home purchase is a team of people working to make it happen. Here are the key players you’ll meet:

Home Loan Specialist +

Your Home Loan Specialist will be your main point of contact during the loan process. They’ll explain loan options, help you gather documents, and answer questions along the way. No extra cost to you — this service is built into working with your lender.

Mortgage Lender +

A mortgage lender is the company providing your loan (like us, Churchill Mortgage). They review your finances, underwrite the loan, and approve the final amount. Lender fees vary but are disclosed up front in your Loan Estimate.

Real Estate Agent +

A real estate agent helps you search for homes, make offers, and negotiate with sellers. In most cases, the seller covers the agent’s commission — so there’s no out-of-pocket cost for you as the buyer.

Insurance Agent +

The insurance agent finds a homeowners insurance policy that protects your home and belongings. Premiums depend on location, home size, and coverage options. Expect to budget around $100–$200 per month.

Title & Escrow Officers +

The title and escrow officers confirm legal ownership of the home, hold funds in escrow, and manage the closing paperwork. Title insurance and escrow fees vary but usually run 0.5–1% of the home’s purchase price. (Don’t worry, we’ll cover escrow later!)

Inspector +

Your home inspector evaluates the home for hidden issues (like roof damage, plumbing problems, or safety concerns). Inspections are optional but highly recommended. Pricing varies by location, usually $300–$600.

Appraiser +

A home appraiser determines the fair market value of the property, which ensures you’re not overpaying. An appraisal is required by lenders. Costs are typically $500–$700 and are included in your closing costs.

You’ve got a sense of the team that will help you through this process — now let’s talk about where it all begins. Before you even start house hunting, you’ll want to know how much home you can really afford.

That’s where pre-qualification and pre-approval come in. They might sound similar, but they play very different roles in the home buying process. Knowing the difference will save you time, stress, and give you an edge when you’re ready to make an offer.

Your Next Steps - The Home Buying Process

Are you ready to start? Excellent!

Everyone thinking about buying a home should start in the same place: Getting Pre-Approved. A quick phone call to your local Home Loan Specialist is all it takes to get things moving.

* An appraisal normally takes up to two weeks from the time it is ordered until the report is received. *You are required to sign the closing disclosure by midnight of the same day it is issued.

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Chapter One: Know Your Buying Power

Pre-Approval, Credit, Interest Rates, and What Lenders Look For

Know Your Buying Power

The first big question on your mind right now is probably: “How much house can I actually afford?” Before you start looking at listings or walking through open houses, it helps to understand how lenders look at your finances and decide what you qualify for.

In this chapter, we’ll walk through the first steps — from pre-approval to breaking down a monthly payment — and explain how credit scores, interest rates, and debt-to-income ratio all play a role. Think of it as the “know before you go” part of buying a home. Once you have this down, you’ll feel more confident moving forward and avoid surprises later.

Pre-Approval vs. Pre-Qualification: What's the Difference?

Before you start house hunting, you’ll want a clear idea of what you can afford. That’s where pre-qualification and pre-approval come in. They sound similar, but they’re two very different steps.

This letter makes a big difference. Sellers and agents see it as proof you’re serious and financially ready, and it gives you peace of mind knowing your budget is realistic. In a competitive market, pre-approval can be the thing that puts your offer ahead of others.

Side-by-Side Comparison of a Pre-Approval and Pre-Qualification

Why This Step Matters

Pre-qualification is a good starting point when you’re just exploring, but pre-approval is what sets you up for success when you’re ready to make an offer. One is a ballpark estimate, the other is a verified commitment — and only pre-approval gives you true confidence in your budget.

Your Turn!

Use our Monthly Mortgage Calculator below to test different loan amounts, down payments, and interest rates to see how they change your monthly payment.

INSERT MONTHLY PAYMENT CALC HERE

How (and Where) to Get Pre-Approved for a Mortgage

Documents Needed for Mortgage Pre-Approval

Hard vs. Soft Credit Pulls During the Pre-Approval Process

When you apply for pre-approval, your lender will check your credit report. This step is important because it verifies your history of borrowing and repayment, which helps confirm what you can realistically afford.

Hard vs. Soft Credit Pulls

• Soft Pull: Doesn’t affect your credit score. This is often used during pre-qualification since it’s just an estimate.
• Hard Pull: Shows up on your credit report and may cause a small, temporary dip in your score. Pre-approval requires a hard pull because sellers and lenders need verified information they can trust.

What This Means for You

Don’t stress the hard pull. A few points on your score won’t make or break your ability to buy a home — but having that pre-approval letter can make all the difference when it comes to getting your offer accepted.

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Chapter Two: Understand Your Monthly Payment

What Makes Up Your Monthly Mortgage Payment?

When most people think about buying a home, they picture the big number — the price on the listing. But what really matters to your budget is the monthly payment, because that’s what you’ll actually live with month after month (just like rent, car payments, or all those streaming subscription fees).

Your monthly mortgage payment isn’t just one simple bill. It’s made up of four parts, often called PITI. Understanding these pieces helps you see the full picture of what you can afford, and keeps you from being surprised later.

Principal: The portion of your payment that goes toward paying down the actual amount you borrowed. Over time, this reduces your loan balance.

Interest: The cost of borrowing money from the lender. Your interest rate determines how much this piece will be.

Taxes: Property taxes are collected by your lender and paid to your local government. The amount depends on where you live and the value of your home.

Insurance: Homeowners insurance protects your home and belongings. If you put down less than 20%, you may also have to pay mortgage insurance, which protects the lender until you build more equity.

Example Monthly Mortgage Breakdown

Here’s how a typical $350,000 home purchase might look when you break down the monthly payment into principal, interest, taxes, and insurance.

The Interest Rate: What it is, Why it Exists, And How Yours Is Determined

What Is a Mortgage Interest Rate?

When you borrow a large amount of money to buy a home, you’ll be charged a fee for using that money. That fee is called interest, and it’s expressed as a percentage of your loan amount.

Over time, this percentage adds up, and that’s why your payment is split between principal (paying down what you borrowed) and interest (the lender’s fee).

Why A Mortgage Interest Rate Exists

Lenders aren’t just giving away money — they take on risk every time they approve a loan. Charging interest is how they cover that risk and make it possible to lend in the first place. You can think of it like paying “rent” on the money until you’ve fully paid the loan back.

How Your Mortgage Interest Rate Is Determined

Your exact interest rate is shaped by two things:

1. The Market (something you can’t control)

Big-picture forces like inflation, the bond market, and Federal Reserve policy move mortgage rates up and down for everyone.

Dig Deeper: How Bonds and Mortgage-Backed Securities Impact Rates

Most mortgage rates are tied to the bond market, especially the 10-year U.S. Treasury note. Here’s why:

• Investors see mortgages as relatively safe investments, so lenders set mortgage rates based on how Treasury bonds are performing.
• When bond yields rise (meaning investors demand a higher return), mortgage rates usually rise too.
• When bond yields fall, mortgage rates tend to follow.

On top of that, mortgages are often bundled together and sold as mortgage-backed securities (MBS). The demand for these securities in financial markets also influences rates. If investors buy heavily into MBS, rates can drop. If demand is low, rates climb.

In short: mortgage rates move daily because they’re tied to the same financial markets that influence U.S. bonds.

2. You (something you can control)

Your credit score, down payment amount, loan type, and debt-to-income ratio help decide the exact rate you’re offered.

Personal Factors That Affect Your Mortgage Interest Rate: Credit Score, DTI, and Down Payment

You can’t do much about inflation or the bond market, but you can take steps that directly impact the interest rate you’re offered. These factors are within your control — and even small changes can save you thousands over the life of your loan.

Credit Score

When it comes to your interest rate, credit scores carry a lot of weight. They tell lenders how reliably you’ve managed debt in the past, and that helps predict how likely you are to repay your loan.

The FICO Score (the one that matters most)

There are many types of credit scores out there (VantageScore, educational scores from apps, etc.), but the one most lenders use is the FICO Score. In fact, when you apply for a mortgage, lenders often look at a version of your FICO that’s designed specifically for home loans.

FICO Score Ranges

• 800+ = Excellent (best rates possible)
• 740–799 = Very Good
• 670–739 = Good
• 580–669 = Fair (you may still qualify, but at higher rates)
• Below 580 = Poor (harder to qualify without special programs)

What Makes Up Your FICO Score

Your score isn’t random — it’s built from five categories:

1. Payment History (35%) – Have you paid past credit accounts on time?
2. Amounts Owed (30%) – How much of your available credit are you using?
3. Length of Credit History (15%) – How long you’ve had accounts open.
4. Credit Mix (10%) – A variety of credit types (credit cards, loans, etc.) is viewed positively.
5. New Credit (10%) – Too many new accounts or recent hard inquiries can lower your score.

Why Other Scores Look Different

If you’ve ever checked your score on a free app, you may have noticed it doesn’t match what your lender says. That’s because many apps show VantageScore, which uses a slightly different formula. Lenders don’t use this when approving mortgages, so your “real” FICO may be higher or lower than what you see.

Ways to Improve Your Credit Score Before Buying A Home

Improving your credit doesn’t have to take years; even small steps now can make a difference before you apply. Here are a few smart moves:

Pay down balances: Aim to keep credit card usage under 30% of your available limit (under 10% is even better)

Avoid new credit: Hold off on opening new accounts or financing big purchases until after closing.

Keep accounts open: Length of credit history matters, so don’t close old credit cards right before applying.

Check your reports: You’re entitled to a free copy of your credit report at AnnualCreditReport.com. Look for errors or outdated info and dispute them if needed.

Stay consistent: Keep paying bills on time, even one missed payment can drag down your score quickly.

Debt-to-Income Ratio (DTI): How It Affects Your Interest Rate

So far, we’ve talked about credit scores — one of the biggest factors lenders use to decide your interest rate. But your score isn’t the whole picture. Lenders also want to know: “How much of your monthly income is already going toward other debts?”

That’s where your Debt-to-Income Ratio (DTI) comes in.

What Is Debt-to-Income Ratio (DTI)?

Your DTI is the percentage of your gross monthly income (the money you earn each month before taxes) that goes toward debt payments. This includes things like car loans, student loans, credit cards, and your future mortgage payment.

• Front-End DTI: Just your housing costs (mortgage, property taxes, insurance, HOA).
• Back-End DTI: Housing costs plus all your other debts (car, student loans, credit cards, etc.).

Why Lenders Care About DTI

DTI is basically a lender’s way of asking: “If we give you this mortgage, will you realistically be able to pay it back every month?” The lower your DTI, the less risky you look — and the better your chances at getting approved with a strong rate.

Example:

If you earn $6,000 per month and your debts total $1,500/month, your DTI is 25%. That’s solid. But if your debts are $3,000/month, your DTI jumps to 50% — which may limit your loan options or lead to a higher rate.

What’s a Good DTI Ratio?

Your DTI works kind of like a balancing act. The more of your paycheck that’s already spoken for by debt, the less room you have for a mortgage. Lenders use benchmarks to figure out if you’re carrying just the right amount — or tipping too far. Different lenders and loan programs have slightly different rules, but here are the general benchmarks:

• 36% or lower → Excellent. You’ll have more loan options and better chances at a lower rate.
• 37 - 43% → Acceptable. Many buyers fall into this range, though lenders may be a little more cautious.
• 44% or higher → Risky. You may still qualify, but with fewer loan choices and possibly higher rates.

Here’s a quick breakdown by loan type:

👉 Most lenders prefer a back-end DTI of 43% or lower for a standard mortgage. Some programs (like FHA loans) may allow higher DTIs, but it often comes with trade-offs.

How to Improve Your DTI Ratio

If your DTI feels a little high, don’t panic. Most buyers have room to adjust, and even small changes can put you in a stronger spot:

Pay down loans with big monthly payments Knocking out a car loan or credit card balance can drop your ratio quickly.

Hold off on new debt Skip financing new furniture or opening a credit card until after closing.

Put more money down A larger down payment reduces the size of your loan, which lowers your future housing costs.

Boost your income (even temporarily) A raise, bonus, or side hustle can make your ratio look better to lenders.

💡A Tip About DTI: Sometimes it’s smarter to focus on one debt with a high monthly payment instead of spreading payments across several smaller debts. Lenders care more about the monthly total than the overall balance.

Down Payment: What It Is and How It Affects Your Interest Rate

Your down payment is the chunk of money you put toward the home at closing. Most people think of it simply as “skin in the game,” but it actually plays a huge role in the type of loan you qualify for, your monthly payment, and the interest rate you’re offered

Do You Need to Put 20% Down?

Like mentioned before, Lenders think in terms of risk. The more you put down, the less risk they take on — and the more confident they are in offering you a lower rate. That’s why 20% is often seen as the “magic number.” At that level, your payment is smaller, your rate is typically lower, and you don’t have to pay private mortgage insurance (PMI).

But here’s the thing: 20% isn’t required. Many buyers successfully purchase their first home with much less, sometimes as little as 3–5% down.

What Happens If You Put Less than 20% Down?

When you put down less than 20%, you’ll likely need PMI (Private Mortgage Insurance). It protects the lender and adds to your monthly cost. The upside is that PMI isn’t always permanent. Once you’ve built 20% equity, you can often request to have it removed.

Real-Life Examples

Meet Tim and Lucy. Both are looking at the same $300,000 home, but they’re approaching the down payment differently.

Tim Puts 5% Down

Tim puts down $15,000 (5%). That leaves him with a $285,000 loan. His monthly payment is higher, and he’ll pay PMI until he builds 20% equity. It gets him into the home sooner, but with extra costs each month.

Lucy Puts 20% Down

Lucy has saved up $60,000 (20%). Her loan amount is $240,000. That lower balance means a smaller monthly payment, a likely better interest rate, and no PMI at all.

Both Tim and Lucy end up in the same price home — they just structure it differently based on what works best for their finances today.

You've finished Chapter 2!

Great job - you just tackled one of the toughest parts of buying a home: understanding how lenders size up your buying power. You now know the basic of pre-approval, credit, monthly payments, DTI, and the down payment.

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Chapter Three: Choosing the Right Loan

In Chapter 3, we’ll walk through the most common loan options (Conventional, FHA, VA, USDA, and more), break down who they’re best for, and share the trade-offs you’ll want to know before choosing one.

Choosing the Right Loan

Understanding Loan Options and Mortgage Insurance

You’ve learned how lenders size up your buying power — now it’s time to put that knowledge to work. The type of loan you choose will shape your monthly payment, how much you need for a down payment, and even how competitive your offer looks to sellers.

In this chapter, we’ll break down the most common loan types (Conventional, FHA, VA, USDA, and Jumbo), explain the difference between fixed and adjustable rates, and show how your down payment impacts the overall picture. By the end, you’ll know exactly which options fit your situation — and which ones to avoid.

What Makes Up a Loan Option?

Before we dive into the different loan types, let’s zoom out. Every mortgage has a few building blocks that shape what it looks like — and what it costs you.

Loan Amount This is the total you borrow from the lender after subtracting your down payment from the home’s price. (If you’re buying a $300,000 home and putting 10% down, your loan amount is $270,000.)

Loan Term The length of time you have to pay the loan back. The most common terms are 30 years and 15 years. A shorter term means higher monthly payments, but you’ll save thousands in interest.

Interest Rate We covered this in Chapter 1: it’s the “fee” you pay to borrow money, expressed as a percentage. Even a small difference in rate can change your monthly payment and how much you pay over time.

Loan Program / Type This is where the differences really kick in. FHA, VA, USDA, Jumbo, and Conventional all come with their own rules about credit, down payment, insurance, and more. We’ll break these down in just a moment.

Down Payment The upfront money you put toward the home. We talked in Chapter 1 about how it lowers risk for the lender and can help you avoid mortgage insurance. Different loan programs have different minimums.

Discount Points Sometimes called “buying down the rate,” these are optional upfront fees you can pay to secure a lower interest rate. One point typically costs 1% of your loan amount.

Together, these pieces make up the “shape” of your loan. Once you understand them, comparing loan types gets a whole lot easier.

Mortgage Loan Types Explained

Every buyer’s situation is different, and that’s why there’s more than one type of mortgage. The right loan can make buying a home easier, more affordable, or just a better fit for your budget. Here are the main loan types you’ll come across:

Conventional Loans

Conventional loans are the go-to choice for most buyers. They’re offered by private lenders, usually require at least 3–5% down, and give you more flexibility if you have solid credit and steady income. Put 20% down and you’ll skip private mortgage insurance (PMI) altogether. Most buyers choose a 30-year or 15-year term, depending on whether they want smaller monthly payments or to pay off their home faster.

Credit Score: Typically 620+

Best For: Buyers with solid credit and steady income.

Trade-offs: Stricter requirements compared to government-backed loans

FHA Loans

Backed by the Federal Housing Administration, FHA loans are a favorite for first-time buyers who don’t have perfect credit or a big down payment saved. You can qualify with as little as 3.5% down and with lower credit scores than conventional loans typically allow. The main negative is mortgage insurance — FHA loans require it, and unlike conventional PMI, it usually lasts for the life of the loan unless you refinance.

Credit Score: 580+ for 3.5% down (500–579 possible with 10% down)

Best For: Buyers with lower credit scores or limited savings.

Trade-offs: You’ll pay mortgage insurance, and in most cases it stays for the life of the loan unless you refinance.

VA Loans

VA home loans are a top benefit for veterans, active-duty service members, and eligible surviving spouses. They require no down payment, no private mortgage insurance (PMI), and often have lower mortgage interest rates than other loan types. A one-time VA funding fee may apply, though many veterans are exempt.

Credit Score: Often 620+, but some lenders accept lower

Best For: Veterans and service members.

Trade-offs: There’s a one-time VA funding fee (waived in some cases)

USDA Loans

USDA loans are designed to make homeownership more affordable in rural and certain suburban areas. They require no down payment and come with competitive interest rates, which can make monthly payments much lower than other low-down-payment options.

Credit Score: Usually 640+ (some lenders may allow lower with strong compensating factors)

Best For: Buyers in qualifying rural or suburban areas with modest incomes.

Trade-offs: Location and income restrictions can be limiting.

JUMBO Loans

Jumbo loans are for homes that exceed the conforming loan limits set by Fannie Mae and Freddie Mac. Because these loans involve larger amounts, lenders require higher credit scores, bigger down payments, and strong overall finances.

Credit Score: Typically 700+

Best For: Higher-priced or luxury homes

Trade-offs: Bigger down payment (often 10–20%), tougher requirements, and more cash reserves needed.

No Score Loans

At Churchill Mortgage, we offer no score loans for buyers who don’t have a traditional credit score. Instead of relying on credit reports, we review alternative payment history — things like rent, utilities, or other recurring bills. This makes it possible for people who avoid debt to still qualify for a home loan.

Credit Score: No traditional score required

Best For: Buyers who live debt-free or don’t use credit cards/loans

Trade-offs: Requires extra documentation and may come with fewer loan program options compared to conventional financing

Fixed Vs. Adjustable Rate: What’s the Difference?

When you take out a mortgage, you’re not just borrowing money — you’re also agreeing on how the “fee” for borrowing (your interest rate) will be structured. That setup determines whether your rate stays the same every month or has the potential to change over time. In other words, it’s about deciding how predictable (or flexible) your payment will be in the years ahead.

Fixed-Rate Mortgages (FRMs)

With a fixed-rate mortgage, your interest rate stays the same for the entire life of the loan. That means your principal and interest payment never changes, even if market rates rise.

Fixed-Rate Mortgages Are Best For: First-time buyers and anyone who values stability and predictability.

Trade-Offs of a Fixed-Rate Mortgage: The starting rate may be a little higher than an adjustable option.

Adjustable-Rate Mortgages (ARMs)

An ARM starts with a lower “introductory” rate for a set period (like 5, 7, or 10 years). After that, the rate can adjust up or down based on the market.

Adjustable-Rate Mortgages are Best For: Buyers who plan to move, refinance, or pay off their home before the fixed period ends.

Trade-Offs of an Adjustable-Rate Mortgage: Payments can rise after the intro period, which adds risk if you stay in the home long-term.

💡 Why Most First-Time Buyers Go with a Fixed-Rate Mortgage

For many first-time buyers, peace of mind is worth more than chasing the lowest possible starting rate. A fixed mortgage means no surprises in your monthly payment — and that can make budgeting a whole lot easier.

Mortgage Insurance Explained

By now, you’ve seen the term PMI or “private mortgage insurance” pop up a few times. Let’s slow down and break it out, because it’s something first-time buyers hear about often, and it can really affect your monthly payment.

What Is Mortgage Insurance?

Mortgage insurance is an extra cost added to your loan when you don’t meet certain requirements (like putting 20% down on a conventional loan). But here’s the important part: it doesn’t protect you at all — it protects the lender.

By charging you mortgage insurance, the lender reduces their risk in case you stop making payments. In other words, you’re paying an additional fee each month so the lender feels more comfortable approving your loan. That’s why people often see mortgage insurance as “paying more without getting more.”

There are two main types of mortgage insurance you’ll hear about:

Private Mortgage Insurance (PMI)

• Where PMI applies: Conventional loans
• When PMI kicks in: If your down payment is less than 20%
• Cost of PMI: Usually 0.3%–1.5% of your loan amount per year, added to your monthly payment
• How to remove PMI: Once you reach 20% equity in your home, you can request to cancel PMI. By law, lenders must remove it automatically when you hit 22% equity.

Mortgage Insurance Premium (MIP)

• Where MIP applies: FHA loans
• When MIP kicks in: Always required, even with larger down payments
• Cost of MIP: Includes an upfront premium (usually 1.75% of the loan amount) plus an annual premium (0.45%–1.05% of the loan amount) that’s added to your monthly payment
• How to remove MIP: For most FHA loans, you can’t remove MIP unless you refinance into a conventional loan later.

Mortgage insurance isn’t forever in every case, but it’s something you need to factor into your budget if you’re putting less than 20% down or using an FHA loan. The key is knowing when it applies, how much it costs, and whether you’ll be able to remove it in the future.

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Chapter Four: Finding and Working with A Real Estate Agent

Why the Right Agent Matters

So far, we’ve focused a lot on numbers… pre-approvals, down payments, interest rates, and all the details lenders look at. Now it’s time to switch gears. Buying a home isn’t just about the financing—It’s also about who’s helping you through the process.

That’s where a real estate agent comes in. A good agent is your guide, coach, and advocate. They’ll help you narrow your search, walk you through tours, write and negotiate offers, and handle the details that can make or break a deal.

What Do Real Estate Agents Do for Buyers?

Find homes that fit your budget and needs

Agents don’t just rely on Zillow or Redfin — they have access to the MLS (Multiple Listing Service), which updates faster and often shows homes before they hit public sites. This means you’ll see more options, and your agent can filter out homes that don’t fit your price range or criteria.

Schedule showings and tours

Instead of you chasing sellers or juggling appointments, your agent handles all the scheduling. They’ll walk through with you and often point out things you might miss, like the age of the roof, signs of water damage, or resale concerns.

Write and negotiate offers

When you’re ready to make an offer, your agent writes up the contract and helps decide on key details: the price, contingencies, and deadlines. They also negotiate with the seller’s agent to strengthen your offer and protect your interests.

Guide you through inspections and appraisals

If the inspector finds issues, your agent helps you decide whether to request repairs, credits, or even walk away. They’ll also keep you informed through the appraisal process, which can affect your loan approval.

Keep the process on track

Buying a home involves lenders, inspectors, title companies, and the seller’s side. Your agent acts as the coordinator, making sure deadlines aren’t missed and that the deal moves smoothly toward closing.

How Buyers Agents Get Paid: The Buyers Agreement

When you decide to work with a buyer’s agent, you’ll usually sign a buyer’s agency agreement (sometimes called ‘the buyer agreement’). This isn’t as intimidating as it sounds. Think of it like setting ground rules. The agreement explains what your agent will do for you, how long they’ll represent you, and how they’ll be compensated. And since no two agreements are exactly alike, it’s worth taking a closer look at the main types you’ll come across.

Types of Buyer Agreements

Touring Agreements

Best for when you’re just testing the waters. A short-term agreement that only covers showings, usually expiring within a week. There’s typically no fee, and it gives you a chance to see if the agent is a good fit.

Exclusive Buyer Agreements

The most common type. You agree to work with one agent who represents only you through the buying process. This creates a clear partnership where your agent is fully committed to your search and negotiations.

Non-Exclusive Agreements

Less common, but useful if you’re looking in more than one market (say, you’re house hunting in two different cities). These agreements let you work with more than one agent at a time, though not every state or agent allows them.

How Much Do Real Estate Agents Cost?

Most real estate agents don’t earn a salary — they work on commission. That means they’re paid a percentage of the home’s final sale price, and the more expensive the home, the higher the commission.

For years, the standard total commission was about 6%, usually split evenly between the buyer’s agent and the seller’s agent. These days, it’s more common to see something closer to 5%, though the exact percentage can vary by region, brokerage, and individual agreement.

It’s also worth noting that brokerages sometimes take a cut of the commission their agents earn. For example, some companies use a “split” setup where a percentage goes back to the brokerage and the rest to the agent.

What Do Agent Fees Cover?

As mentioned above, agents offer their buyers/sellers market expertise, strong negotiating skills, and access to the MLS (a private database of listings). They’re also the ones scheduling tours, preparing offers, navigating paperwork, and keeping the transaction moving smoothly. In short, that fee covers the behind-the-scenes work that helps you land the right home and avoid costly mistakes.

Dive Deeper: What Is A Dual Agency? +

In some cases, one agent may represent both the buyer and the seller. This is called dual agency. The rules for this vary by state — some states don’t allow it at all.
When dual agency happens, the agent may be earning commission from both sides of the deal. That can open up room for negotiation on commission, but it also means the agent has to carefully balance the interests of both parties. By law and ethics, they’re still required to act fairly, but some buyers prefer having their own dedicated agent to avoid any blurred lines

Dive Deeper: The NAR Settlement and How it Changed Agent Commission +

In March 2024, the National Association of REALTORS® (NAR) reached a major settlement to resolve class-action lawsuits that challenged how commissions were handled in real estate transactions. The lawsuits argued that long-standing rules around commissions—especially requiring sellers to offer compensation to buyer agents—distorted incentives and reduced transparency.
As a buyer, you’ll almost always sign an agreement with your agent that clearly spells out how they’re compensated. Sometimes the seller may still agree to cover your agent’s fee, but not always. That means it’s important to review your agreement carefully and understand what you’ll be responsible for.

Choosing the RIGHT Agent:

✅ Traits to Look For:

• Clear communication
• Local expertise (knowledgeable about school systems, neighborhoods, etc.)
• Passionate about the area
• Strong negotiator
• Great listener
• Motivated to help you
• Transparent about fees
• Client-focused

🚫 Traits to Watch Out For:

• Poor Communication (slow replies, missed calls, etc. )
• Pushy Behavior
• Lack of transparency
• Limited Availability
• Inexperience in your area

How To Find a Real Estate Agent

Now that you know what makes a great agent and what to avoid, the next step is finding one. The process doesn’t have to feel overwhelming. With some research, a few smart questions, and referrals from people you trust, you can narrow down the right fit for your needs.

Ask for referrals

Friends, neighbors, or relatives are still the top way most buyers find their agent. If someone you trust had a good experience, ask why they’d recommend that agent.

Do some online research

Look at their website, recent sales, and client reviews. A good website should show their active listings, past experience, and what makes them different.

Check their social media too! Many agents use social media to highlight local knowledge, share market updates, and even show some of their personality. This can help you see if they feel like someone you’d click with.

Interview a few agents

Don’t just go with the first person you meet. Talking to multiple agents helps you compare experience, personalities, and local knowledge. Here are some good questions to ask:

• What’s your experience in this local market?
• What is your strategy for helping me find the right home in my price range?
• What is your communication style and frequency?
• How will you keep me updated throughout the process?
• How will you help me make competitive offers and negotiate with sellers?
• How available are you if I need to tour quickly or make an offer?
• What’s covered in our buyer representation agreement?
• What are the challenges in today’s market?

Check credentials

Make sure the agent is licensed in your state and ask if they’ve earned extra certifications or designations.

Look at their track record

How many homes have they helped buyers with recently? How long do their listings stay on the market? These answers tell you how active and effective they are.

Ask about availability

Real estate moves quickly. You want someone who can respond when you need them, not someone who’s stretched too thin.

Review the contract

Before you commit, read through the buyer agreement carefully. Make sure the compensation structure and terms are clear, and that you feel comfortable signing.

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Chapter Five: Closing Costs and Closing Day

Buying a home isn’t just about the down payment. At the very end, you’ll also pay closing costs: the one-time fees that make the transfer official. Think of it like the “price of admission” to homeownership. Closing costs usually run 2%–5% of your home’s purchase price. On a $300,000 home, that’s roughly $6,000–$15,000.

What Makes Up Closing Costs?

Lender Fees

• Application
• Underwriting
• Loan Origination
• Discount Points to lower your rate (optional)

Service Fees

• Appraisal
• Inspection
• Title Search & Insurance
• Escrow Services
• Attorney (if required)
• Credit Report
• Flood Certification

Government & Property Fees

• Transfer Taxes
• Recording Fees
• Prepaid property tax
• Homeowners Insurance

Other Fees

• HOA Dues (if applicable)
• PMI OR MIP if your loan requires it

5 Ways to Lower Your Closing Costs

For a lot of first-time buyers, closing costs are the single biggest reason homeowning feels out of reach. You may have already pulled together a down payment, and then, right before the finish line, you’re hit with another $6,000–$15,000 in fees.

The good news? There are ways to lower or offset these costs. None of them are “cheating the system.” In fact, many buyers use a mix of these strategies to make closing day more affordable.

1. Ask the Seller for Help

Sometimes called seller concessions, this is when the seller agrees to cover part of your closing costs as part of the deal. In competitive markets this is rare, but in slower markets (or if the home has been sitting for a while) sellers may be willing.

💡 Tip: Your real estate agent can help you structure the offer so it’s realistic and appealing to the seller.

2. Compare Lender Fees

Not all lenders charge the same. Application fees, underwriting, origination — these can vary by hundreds or even thousands of dollars.

When you apply, ask for a Loan Estimate (sometimes called a fee worksheet). This is a standardized document lenders are required to give you that breaks down all the costs, side by side. Comparing those estimates is the only way to see the real differences between lenders.

3. Use Down Payment or Closing Cost Assistance Programs

State and local programs often provide grants or loans to help with upfront costs. Depending on your state or city, these programs might give you a grant (money you don’t have to repay) or a forgivable loan that helps cover those upfront expenses.

4. Negotiate Your Services

Some fees, like title insurance, attorney, or inspection, are set by the service provider, not your lender. You’re allowed to shop around. Even a few hundred dollars saved here makes a difference.

5. Choose Carefully With Points

Discount points (paying upfront to lower your rate) can save you money over time, but they increase your upfront costs. Make sure they fit your short- and long-term goals before you commit.

Acceptable Ways to Pay Closing Costs

Lenders are picky about where your closing money comes from. Here’s the breakdown

✅ Allowed:

• Earnest money deposit (with proof it cleared)
• Checking/savings/money market/investment accounts (with 30–60 days of statements)
• Stock sales, 401(k) loans, or secured credit lines (with paperwork)
• Proceeds from another property sale
• Gifts from close relatives (with a signed gift letter + proof of transfer)

❌ Not allowed:

• Cash on hand
• Unsecured loans (like a personal loan)
• Non-vested stock options
• Loans from family/friends without documentation

Closing Day: The Timeline and Breakdown

You’ve saved, planned, and signed your way through the home buying process — now it’s time for the finish line: closing day. This is when ownership officially transfers and the home becomes yours.

Most closings take about an hour and happen at a title office, attorney’s office, or escrow company (sometimes virtually).

Who's Attending Closing Day?

• You (and any co-borrower)
• Your real estate agent
• The seller and their agent (sometimes they sign separately)
• The closing or escrow officer
• Your Home Loan Specialist (in person or on call if needed)

What Happens At Closing?

1. Review the Numbers

The closing agent goes over your Closing Disclosure — the final breakdown of what you owe and what the seller owes. This includes your down payment, closing costs, and any credits.

2. Pay What’s Due

Closing costs can’t be paid in cash. You’ll need to bring a cashier’s check or show proof of a wire transfer for the exact amount.

3. Sign (a lot of) Paperwork

This includes your mortgage note, deed of trust, and other affidavits. Each one basically says: “Yes, I agree to the terms and promise to pay back the loan.”

4. Transfer Ownership

The seller signs the deed, transferring the home to you. The escrow agent then wires money to the seller.

5. Recording the Deed

Once everything is signed and funds are distributed, the new deed is recorded with the county, making you the official homeowner!

💡 Quick Tip: Some lenders now offer hybrid or online closings, which let you e-sign most documents ahead of time. That way, your in-person appointment is faster and less overwhelming.

Post Closing - What Happens Next?

Once the papers are signed and the keys are in your hand, there are still a few important things headed your way. From official documents to your first mortgage statement, here’s what to expect in the days and weeks right after closing.

Closing Disclosure (CD)

This is the final, itemized breakdown of your loan terms, monthly payment, interest rate, and all closing costs. You receive it at least 3 business days before closing, but keep it handy after closing too. It’s your “receipt” for the mortgage and a reference if questions come up later.

Loan Documents

You’ll receive copies of your recorded loan documents (like the deed of trust and note). These are mailed after the county officially records them.

Deed of Trust and Note

These confirm your promise to repay the loan and give the lender a security interest in the property. Hold onto these for your records.

Escrow Analysis Statement

This ensures enough funds are collected in your escrow account to cover property taxes and insurance when they come due.

Loan Starter Statement

Arrives within a week of closing and shows your first payment amount and due date.

Welcome Email or Call

Expect a welcome email from Churchill’s Loan Servicing department about a week after you receive your first statement, followed by a phone call a month later to answer questions.

Customer Satisfaction Survey

We’ll send you a quick survey shortly after closing to learn about your experience.

Moving Into Your New Home

Once the paperwork is wrapped up, it’s time to shift gears from signing to settling in. Closing day is exciting, but move-in day comes with its own to-do list. A little prep makes it much less stressful.

Here are a few things to cover right away:

• Utilities – Call ahead to transfer or start electric, water, gas, and internet service in your name.
• Mail & Address – Set up mail forwarding with USPS and update your address with banks, employers, and subscriptions.
• Insurance – Double-check that your homeowner’s insurance is active from day one.
• Keys & Security – Change or re-key locks for peace of mind.
• Walkthrough – Snap photos or videos of the home before moving furniture in. It’s a good baseline for maintenance and repairs.

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Chapter Six: Loan Servicing

You’ve closed, picked up the keys, and unpacked your boxes. What happens with your mortgage now? Buying a home isn’t just about getting to closing day. Once the ink is dry, your loan moves into the servicing phase.

What is Loan Servicing?

The servicing phase is the ongoing management of your mortgage — basically everything that happens month to month until the loan is paid off.

Your loan servicer is the company that:

• Collects your monthly payment (principal, interest, taxes, insurance)
• Manages your escrow account (if you have one)
• Seller’s Real Estate Agent
• Provides statements and balance updates
• Handles customer service questions or concerns
• Notifies you if servicing is ever transferred to another company

When Your Loan Is Transferred

At Churchill Mortgage, we service some of our loans directly. But it’s very common for lenders to transfer or “sell” the servicing rights to another company.

Why does this happen? Mortgage lenders often free up money to make more loans by selling servicing rights. It doesn’t mean anything about your financial standing — it’s simply how the industry works.

If your loan is transferred, you’ll get official notices from both your current servicer and your new one. These notices will tell you:

• Who your new servicer is
• When the change takes place
• Where to send your next payment
• Contact information for your new servicer

What Changes When Your Loan Is Transferred?

The good news is—almost nothing. Your interest rate, loan amount, monthly payment, payment schedule, and credit history all stay the same. The only thing that changes is where you send your payment, while everything else about your loan remains intact.