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Navigating the Home Buying Process Without Regret

Updated: Feb 8

house keys attached to house

Buying a home is often one of the most significant financial decisions individuals and families make. It's a milestone that represents stability, security, and often, a lifelong investment. However, navigating the home buying process can be daunting, especially when considering the financial implications. How do you know when you should buy a house?  How much house is too much? How can I buy a house and not regret it? How much money is needed to buy a house? In this post I’ll provide guidance on managing the home buying process in a way that allows you to lay your head on your pillow and not stress about your mortgage payment.


Financial Preparation: Before even considering buying a home, it's crucial to be financially prepared. My first piece of advice is to pay off all your consumer debt. Buying is exhilarating but can turn terrifying when the A/C stops working, or you find a leak in the roof. If you have debt on top of your mortgage, you will experience stress like never before. How are you going to pay to replace these items without adding to the balance of your already unbearable high interest rate credit cards? Once your debt is paid off, I encourage individuals / couples to have an emergency fund of 3-6 months' worth of expenses saved up. This fund acts as a safety net in case of unexpected expenses or job loss. Pay off your consumer debt and then have 3-6 months emergency fund.


Save for a Down Payment: The more you can put down the better.  For first time home buyers I recommend at least 5-10% and ideally 20% of the home's purchase price. A larger down payment not only reduces the amount borrowed but also eliminates the need for private mortgage insurance (PMI), which adds to the monthly mortgage payment. Saving diligently for a down payment demonstrates financial discipline and ensures a more manageable mortgage.


Stick to a Zero-Based Budget: It is extremely important to live below your means. When determining how much house you can afford, it's crucial to establish a budget based on your current income and expenses. Remember, just because a lender approves you for a certain loan amount doesn't mean you should stretch beyond your comfort zone. Stick to a budget that allows you to comfortably afford your mortgage payments while still saving for retirement, emergencies, and other financial goals. Having a zero-based budget takes the financial stress out of your life because you are telling every dollar where to go before the month starts. Your emergency fund serves as a back-up in the event you have TRUE emergencies.


Choose a 15-Year Fixed-Rate Mortgage: While adjustable-rate mortgages (ARMs) may offer lower initial interest rates, they come with the risk of future rate hikes, potentially leading to higher monthly payments. I always recommend a fixed-rate mortgage, as it provides stability and predictability in your housing costs over the long term. With a fixed-rate mortgage, your principal and interest payments remain the same throughout the loan term, making budgeting easier. Having a 15-year mortgage offers you many benefits like more of the payment going to the principal instead of interest, shorter time to completely own your home, you build equity much faster and overall lower costs. Did you know that for a house that is $350,000 and assuming a 10% down-payment, compared to a 15-year mortgage at 6.7% interest, you will pay approximately $363,000 more for a 30-year mortgage with an interest rate of 7.2%!  The only difference in the monthly payment would be about $390 per month! Think what an extra $363,000 will do for you in retirement.


Avoid Overbuying: It's tempting to fall in love with a dream home that may stretch your budget to its limits. A more expensive home means higher mortgage payments, property taxes, insurance premiums, and maintenance costs. Be realistic about what you can comfortably afford without sacrificing your financial well-being. Remember, a modest home that fits your budget leaves room for saving and investing in your future. A rule of thumb to go by when determining how much house you can afford (assuming a 15-year fixed rate mortgage); make sure your monthly payment does not exceed more than 25% of your monthly take home pay. Any amount over the 25% threshold will cause undue stress and cause you to feel like a prisoner in your own home.  Avoid being house poor!


Factor in Closing Costs and Additional Expenses: When budgeting for your home purchase, don't forget to account for closing costs, which typically range from 2% to 5% of the home's purchase price. These costs include fees for loan origination, appraisal, title insurance, and more. Additionally, set aside funds for moving expenses, home repairs or renovations, and furnishings. Being financially prepared for these additional expenses prevents any surprises down the road.


Get Pre-Approved for a Mortgage: Before house hunting, get pre-approved for a mortgage to strengthen your negotiating power with sellers. Pre-approval involves a thorough review of your financial situation by a lender, including income verification, credit check, and documentation of assets and liabilities. Having a pre-approval letter in hand shows sellers that you're a serious buyer ready to make an offer. For those who don’t buy into the world’s system of credit scores, seek out a reputable mortgage lender that performs manual underwriting. You may ask, “What is Manual Underwriting?” Well, it’s just what it sounds like. It’s the old-fashioned way manually underwriting your loan based on physical proof you are who you say you are, and your income is what your report it to be and more. There are several Lenders that still offer Manual Underwriting and yes, you can get a great rate just like someone who had a perfect 850 credit score. This is going to blow your mind. Find out how George Kamel bought a house using manual underwriting and without a credit score.

Partner With an Experienced Real Estate Agent: Navigating the real estate market can be complex. It’s not as simple as just finding a house on Zillow and contacting the listing agent. Although technology is great at making it much easier to find a home that meets your needs and budget, there are direct advantages, and protections, to you as the buyer when you choose to work with a real estate professional. Working with a seasoned, experienced real estate professional provides expertise, guidance, and access to resources that will streamline your home buying process and you’ll be provided with the best information to make a truly informed decision. I suggest interviewing 2 or 3 different agents to assess their experience, expertise, communication style and understanding of your needs. You can download my suggested Realtor Interview Questions for free.


In conclusion, buying a home is a significant financial decision that requires careful consideration and planning. By following these financial principles, such as saving for a down payment, sticking to a budget, choosing the right mortgage, and avoiding overbuying, you can achieve homeownership while maintaining financial stability and security. Remember, the goal is not just to buy a home but to do so in a way that sets you up for long-term financial success. Your future self will thank you!

So how did this hit you? It hit me hard too and I wish I had listened to this advice many years ago. This goes against what every mainstream bank and financial institution offers today. It's time to think different. I'm happy to answer any questions you might have about saving up for a big purchase like a home, putting together a plan to pay down your debt or maybe you have something else in mind for your money. Whatever it is, click on the link below and let's chat.

Be Free,

Greg Carroll

Legacy Financial Coaching

Become A Better Steward


Whether you are financially frustrated or have big money goals, I help you take control of your money so you can live debt-free, build wealth and better steward your resources to create a lasting legacy. Find out what its' like to Work With Me. 

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