10 Things New Homeowners Wish They Knew Before Buying

# 10 Things New Homeowners Wish They Knew Before Buying Buying your first home is exciting—but it's also filled with surprises, unexpected costs, and lessons learned the hard way. After helping thousands of first-time homebuyers navigate the mortgage process, we've compiled the **10 most common regrets and "I wish I knew that" moments** from new homeowners. Learn from their experiences to make smarter decisions, avoid costly mistakes, and feel confident throughout your homebuying journey. --- ## 1. "I Wish I Knew About NON-QM Loans Sooner" ### The Regret Many self-employed buyers, gig workers, and freelancers spend months (or years) trying to qualify for conventional loans—only to be rejected because their tax returns show low income after business deductions. **Real Example:** Jessica, a freelance marketing consultant earning $110,000 annually, was denied by three lenders because her tax returns showed only $58,000 after business write-offs. She almost gave up on homeownership until she discovered **Bank Statement Loans**. ### What You Should Know If you're self-employed, work gig jobs, or have non-traditional income, **NON-QM loans** let you qualify using: - **Bank statements** (12-24 months of deposits) - **1099 forms** (for gig workers and contractors) - **Asset depletion** (for retirees with substantial savings) - **Foreign income** (for non-U.S. citizens) You don't need perfect tax returns showing high income. Lenders verify your ability to repay using **alternative documentation**. ### Action Steps ✅ **If you're self-employed:** Explore [Bank Statement Loans](/products/bank-statement) before applying for conventional loans ✅ **If you're a gig worker:** Check out [1099 Income Loans](/products/1099-income) ✅ **If you're retired:** Consider [Asset Depletion Loans](/products/asset-depletion) ✅ **If you're a foreign national:** Review [Foreign National Loans](/products/foreign-national) **Learn more:** [First-Time Homebuyer's Guide to NON-QM Loans](/blog/first-time-homebuyer-guide-non-qm-loans) --- ## 2. "I Wish I Saved More for Closing Costs" ### The Regret Most first-time buyers focus exclusively on the down payment—then get shocked by closing costs ranging from **2-5% of the purchase price**. **Real Example:** Marcus saved $40,000 for a 10% down payment on a $400,000 home. He was blindsided by $12,000 in closing costs and had to scramble to borrow from family. ### What You Should Know **Closing costs** include: - Loan origination fees (0.5-1% of loan amount) - Appraisal ($500-$800) - Title insurance ($1,000-$3,000) - Escrow/attorney fees ($500-$1,500) - Home inspection ($400-$600) - Property taxes (prorated) - Homeowners insurance (first year prepaid) - HOA fees (if applicable) - Recording fees - Credit report fees **Total:** Typically **2-5% of purchase price** ### Action Steps ✅ **Budget for closing costs:** Add 3-5% to your down payment savings ✅ **Get a Loan Estimate:** Lenders must provide this within 3 days of application ✅ **Negotiate seller concessions:** Ask seller to cover some closing costs ✅ **Shop around:** Compare lender fees (origination, underwriting, processing) ✅ **Ask about lender credits:** Some lenders offer credits in exchange for slightly higher rates **Example Budget:** - $400,000 purchase price - 10% down payment: $40,000 - 3% closing costs: $12,000 - **Total cash needed: $52,000** --- ## 3. "I Wish I Checked My Credit Score Earlier" ### The Regret Many buyers don't check their credit until they're ready to apply for a mortgage—only to discover errors, collections, or a lower score than expected. Fixing credit issues can take 3-6 months. **Real Example:** Sarah applied for a mortgage and was shocked to find a $1,200 medical collection she didn't know about. It took 4 months to dispute and remove, delaying her home purchase. ### What You Should Know Your **credit score** directly impacts: - **Approval:** Minimum scores range from 580 (FHA) to 640 (conventional) - **Interest rate:** Every 20-point drop can cost 0.25-0.50% higher rate - **Down payment:** Lower scores may require larger down payments **Credit Score Tiers:** - **740+:** Best rates and terms - **680-739:** Good rates - **620-679:** Higher rates, more scrutiny - **580-619:** FHA or NON-QM only - **<580:** Very limited options ### Action Steps ✅ **Check credit 6-12 months before buying:** Get free reports at AnnualCreditReport.com ✅ **Dispute errors immediately:** File disputes with all three bureaus (Experian, Equifax, TransUnion) ✅ **Pay down credit cards:** Get balances below 30% of limits (10% is ideal) ✅ **Don't open new credit:** Avoid new cards, loans, or hard inquiries for 6 months before applying ✅ **Pay all bills on time:** Set up autopay to avoid missed payments ✅ **Don't close old cards:** Length of credit history matters **Quick Credit Boost Tips:** - Pay down credit cards to <10% utilization: +20-40 points - Dispute and remove errors: +10-50 points - Become authorized user on parent's card: +10-30 points - Pay off collections: +10-20 points --- ## 4. "I Wish I Knew How Much House I Could Actually Afford" ### The Regret Many buyers get pre-approved for the **maximum** amount—then realize the monthly payment is uncomfortably high after factoring in property taxes, insurance, HOA fees, and maintenance. **Real Example:** David was approved for a $600,000 loan but didn't account for $800/month HOA fees, $400/month higher utilities, and $300/month maintenance. His "comfortable" budget became stressful. ### What You Should Know **Lenders approve based on DTI (debt-to-income ratio)**, not your comfort level. Just because you're approved for $X doesn't mean you should borrow $X. **The 28/36 Rule:** - **28%:** Housing costs shouldn't exceed 28% of gross monthly income - **36%:** Total debt (housing + car + student loans + credit cards) shouldn't exceed 36% **Hidden Costs Beyond Mortgage:** - Property taxes (1-2% of home value annually) - Homeowners insurance ($1,000-$3,000/year) - HOA fees ($100-$800/month) - Maintenance (1-2% of home value annually) - Utilities ($200-$500/month) - Landscaping, pest control, pool service ### Action Steps ✅ **Use our [Affordability Calculator](/calculators/affordability)** to see realistic budgets ✅ **Factor in ALL costs:** Mortgage + taxes + insurance + HOA + maintenance + utilities ✅ **Leave breathing room:** Don't max out your approval amount ✅ **Test the payment:** Transfer your estimated monthly payment to savings for 3 months to see if it's comfortable ✅ **Plan for emergencies:** Keep 3-6 months expenses in emergency fund **Example:** - Gross monthly income: $10,000 - Max housing cost (28%): $2,800 - Mortgage + taxes + insurance: $2,400 - HOA: $200 - **Total: $2,600** (within budget) - Remaining for utilities, maintenance, savings: $200 --- ## 5. "I Wish I Understood the Difference Between Pre-Qualification and Pre-Approval" ### The Regret Many buyers get "pre-qualified" and think they're ready to make offers—only to lose out to buyers with **pre-approval letters** that carry more weight with sellers. **Real Example:** Emily made an offer on her dream home with a pre-qualification letter. The seller chose another buyer with a pre-approval letter, even though Emily's offer was $5,000 higher. ### What You Should Know **Pre-Qualification:** - Informal estimate based on self-reported information - No credit check - No document verification - Takes 10-30 minutes - **Not very valuable to sellers** **Pre-Approval:** - Formal approval based on verified documentation - Hard credit check - Income, assets, and employment verified - Takes 1-3 days - **Carries weight with sellers** ### Action Steps ✅ **Get pre-approved, not just pre-qualified:** Submit full documentation ✅ **Update pre-approval every 60-90 days:** They expire ✅ **Get pre-approval letters for specific properties:** Some lenders will customize the amount ✅ **Work with reputable lenders:** Sellers trust established lenders **What Sellers Want to See:** - Pre-approval letter (not pre-qualification) - Proof of down payment funds - Reputable lender - Quick closing timeline - Minimal contingencies --- ## 6. "I Wish I Shopped Around for Mortgage Rates" ### The Regret Many buyers go with the first lender they talk to—often their bank—without comparing rates. A 0.25% difference in interest rate can cost **tens of thousands** over 30 years. **Real Example:** Chris accepted a 7.50% rate from his bank. His realtor suggested shopping around. He found 7.00% at another lender, saving $185/month ($66,600 over 30 years) on his $450,000 loan. ### What You Should Know **Interest rate differences add up:** | Loan Amount | Rate Difference | Monthly Savings | 30-Year Savings | |-------------|----------------|-----------------|-----------------| | $300,000 | 0.25% | $45 | $16,200 | | $300,000 | 0.50% | $92 | $33,120 | | $500,000 | 0.25% | $75 | $27,000 | | $500,000 | 0.50% | $153 | $55,080 | ### Action Steps ✅ **Get quotes from at least 3 lenders:** Banks, credit unions, mortgage brokers, online lenders ✅ **Compare APR, not just interest rate:** APR includes fees ✅ **Negotiate:** Use competing offers as leverage ✅ **Ask about lender credits vs. lower rates:** Sometimes paying points upfront lowers your rate ✅ **Lock your rate:** Once you find the best rate, lock it in (30-60 day lock) **Where to Shop:** - Local banks and credit unions - Mortgage brokers (access to multiple lenders) - Online lenders (Rocket Mortgage, Better.com) - **NON-QM specialists** (NS Funding for self-employed/gig workers) --- ## 7. "I Wish I Knew About Rent vs Buy Analysis" ### The Regret Many buyers assume buying is always better than renting—but in some markets or situations, renting can be financially smarter, especially if you're not staying long-term. **Real Example:** Jordan bought a condo planning to stay 2 years, then relocate for work. After factoring in closing costs, realtor fees, and minimal appreciation, he lost $25,000 compared to renting. ### What You Should Know **Buying makes sense when:** - You plan to stay 5+ years - Home prices are appreciating - Rent is high relative to purchase price - You want stability and equity building - You can afford 20%+ down payment **Renting makes sense when:** - You're relocating within 3 years - Home prices are declining or stagnant - Rent is cheap relative to purchase price - You have unstable income - You can't afford 10%+ down payment ### Action Steps ✅ **Use our [Rent vs Buy Calculator](/calculators/rent-vs-buy)** to compare total costs ✅ **Factor in opportunity cost:** What if you invested down payment money instead? ✅ **Consider your timeline:** 5+ years = buy, <3 years = rent ✅ **Analyze local market:** Is it a buyer's or seller's market? ✅ **Account for transaction costs:** Closing costs + realtor fees (6-8% total) **Break-Even Analysis:** - Closing costs: 3% ($12,000 on $400K) - Realtor fees when selling: 6% ($24,000) - **Total transaction costs: $36,000** - Need **9% appreciation** just to break even - At 3% annual appreciation, need **3 years** to break even --- ## 8. "I Wish I Budgeted for Home Maintenance" ### The Regret First-time buyers often forget that homeownership comes with ongoing maintenance and unexpected repairs. Renters are used to calling the landlord—homeowners foot the bill. **Real Example:** Three months after buying, Lisa's HVAC system failed ($6,500 replacement), then her water heater leaked ($1,200), then the roof needed repairs ($3,800). She had no emergency fund and went into debt. ### What You Should Know **Annual maintenance costs:** Budget **1-2% of home value** per year. **Common Expenses:** - HVAC maintenance/replacement ($150/year maintenance, $5,000-$10,000 replacement) - Water heater ($1,000-$2,500 replacement every 10 years) - Roof repairs/replacement ($5,000-$15,000 every 20-30 years) - Plumbing issues ($200-$2,000) - Electrical repairs ($150-$1,500) - Appliance replacements ($500-$2,000 each) - Pest control ($300-$600/year) - Landscaping ($500-$2,000/year) - Painting (interior/exterior) ($2,000-$10,000 every 5-10 years) ### Action Steps ✅ **Budget 1-2% of home value annually:** $400K home = $4,000-$8,000/year ✅ **Build emergency fund:** 3-6 months expenses + $10,000 home repair fund ✅ **Get home inspection:** Identify issues before buying ✅ **Buy home warranty:** $500-$800/year covers major systems ✅ **DIY when possible:** Learn basic maintenance (filters, caulking, painting) **Monthly Maintenance Budget Example ($400K home):** - $300/month = $3,600/year (0.9% of value) - $500/month = $6,000/year (1.5% of value) - $700/month = $8,400/year (2.1% of value) --- ## 9. "I Wish I Knew I Could Negotiate Everything" ### The Regret Many first-time buyers accept the asking price, closing costs, and repair requests without negotiating—leaving thousands of dollars on the table. **Real Example:** After inspection, Tom's home needed $8,000 in repairs. He didn't ask the seller to fix anything or reduce the price. Later, he learned most sellers expect negotiation and would have agreed to $5,000 in credits. ### What You Should Know **Everything is negotiable:** - **Purchase price:** Especially in buyer's markets - **Closing costs:** Ask seller to pay 2-3% - **Repairs:** Request fixes or credits after inspection - **Appliances:** Ask seller to include washer/dryer, fridge - **Closing date:** Negotiate timeline that works for you - **Contingencies:** Inspection, appraisal, financing, sale of current home - **Lender fees:** Origination, underwriting, processing fees ### Action Steps ✅ **Work with experienced realtor:** They negotiate on your behalf ✅ **Research comps:** Know what similar homes sold for ✅ **Don't show desperation:** Sellers have leverage if they know you're emotional ✅ **Ask for seller concessions:** 2-3% toward closing costs ✅ **Request repairs after inspection:** Or credits to handle yourself ✅ **Negotiate lender fees:** Compare and ask lenders to match competitors **Negotiation Wins:** - Purchase price: $10,000 reduction - Seller closing cost credit: $8,000 - Repairs/credits after inspection: $5,000 - Lender fee reduction: $1,500 - **Total savings: $24,500** --- ## 10. "I Wish I Knew About Different Loan Structures (Interest-Only, ARM, etc.)" ### The Regret Most first-time buyers only consider **30-year fixed-rate mortgages**—but other loan structures can save money or provide flexibility depending on your situation. **Real Example:** Amanda bought an investment property with a traditional 30-year mortgage at $2,800/month. The property only rented for $2,600/month (negative cash flow). An **interest-only loan** would have reduced her payment to $2,100/month (positive cash flow). ### What You Should Know **Loan Structure Options:** ### 1. **30-Year Fixed-Rate** (Most Common) - Same payment for 30 years - Predictable and stable - Higher total interest paid - **Best for:** Long-term homeowners who want stability ### 2. **15-Year Fixed-Rate** - Pay off in half the time - Lower interest rate (0.50-0.75% less than 30-year) - Higher monthly payment - Save $100K+ in interest - **Best for:** High-income buyers who want to build equity fast ### 3. **Interest-Only Loans** - Pay only interest for 5-10 years, then principal + interest - Lower initial payments - Maximize cash flow (great for investors) - **Best for:** Real estate investors, high-income buyers expecting income growth **Learn more:** [Interest-Only Loans](/products/interest-only) ### 4. **Adjustable-Rate Mortgages (ARMs)** - Lower initial rate (0.50-1.00% less than fixed) - Rate adjusts after 5, 7, or 10 years - Risk of higher payments later - **Best for:** Buyers who plan to sell/refinance within 5-7 years ### 5. **Hybrid ARMs (5/1, 7/1, 10/1)** - Fixed for 5, 7, or 10 years, then adjusts annually - Lower initial rate than 30-year fixed - **Best for:** Buyers who plan to move or refinance before adjustment ### Action Steps ✅ **Understand your timeline:** Staying 5+ years = fixed, <5 years = ARM ✅ **Consider interest-only for investments:** Maximize cash flow ✅ **Compare 15-year vs 30-year:** Use [Amortization Calculator](/calculators/amortization) ✅ **Ask about all options:** Don't assume 30-year fixed is best **Payment Comparison ($500K loan at 7.00%):** - **30-year fixed:** $3,327/month - **15-year fixed (6.50%):** $4,358/month (save $185K interest) - **Interest-only (10 years):** $2,917/month (then $3,800/month) - **7/1 ARM (6.50%):** $3,160/month (first 7 years) --- ## Bonus Tip: Start Preparing 6-12 Months Early The most successful first-time homebuyers start preparing **6-12 months before** they plan to buy: **12 Months Before:** - Check credit and dispute errors - Start saving for down payment + closing costs - Research neighborhoods and home prices - Avoid opening new credit accounts **6 Months Before:** - Get pre-approved (not just pre-qualified) - Shop for mortgage rates - Gather documentation (pay stubs, tax returns, bank statements) - Attend open houses to understand the market **3 Months Before:** - Finalize pre-approval - Hire realtor - Make offers - Schedule inspections **1 Month Before Closing:** - Finalize mortgage - Transfer down payment funds - Schedule final walkthrough - Arrange homeowners insurance --- ## Frequently Asked Questions ### What's the biggest mistake first-time homebuyers make? **Not shopping around for mortgage rates.** A 0.25% difference can cost tens of thousands over 30 years. Always get quotes from at least 3 lenders. ### How much should I save before buying a home? **Down payment + closing costs + 3-6 months emergency fund + $10K home repair fund.** Example for $400K home: - 10% down: $40,000 - 3% closing costs: $12,000 - 6 months expenses: $18,000 - Home repair fund: $10,000 - **Total: $80,000** ### Should I pay off debt before buying a home? **It depends on your DTI ratio.** If your debt-to-income ratio is above 43%, pay down high-interest debt (credit cards, personal loans) first. Keep low-interest debt (student loans, car loans) if your DTI is manageable. ### Can I buy a home with student loans? Yes! Lenders factor student loans into your DTI ratio. If you're on an income-driven repayment plan, they'll use your actual monthly payment (not 1% of the balance). ### How long does the homebuying process take? **60-90 days** from offer to closing: - Offer acceptance: Day 1 - Inspection: Days 7-14 - Appraisal: Days 14-21 - Loan approval: Days 21-30 - Closing: Days 30-45 ### What if I'm self-employed? Traditional lenders require 2 years of tax returns showing strong income. If your tax returns show low income due to business deductions, consider **[Bank Statement Loans](/products/bank-statement)** or **[1099 Income Loans](/products/1099-income)**. ### Should I use a realtor or buy directly from seller? **Always use a realtor** (buyer's agents are typically free—seller pays commission). Experienced realtors: - Know the market - Negotiate on your behalf - Handle paperwork - Recommend inspectors, lenders, attorneys - Protect your interests ### What's the difference between pre-approval and clear-to-close? - **Pre-approval:** Initial approval based on documentation (before finding a home) - **Clear-to-close:** Final approval after appraisal, title search, and final underwriting (ready to close) ### Can I back out after making an offer? Yes, **if you have contingencies** (inspection, appraisal, financing). Without contingencies, you risk losing your earnest money deposit ($1,000-$5,000). --- ## Next Steps: Prepare for Homeownership ### 1. **Check Your Credit** Get free credit reports at **AnnualCreditReport.com** and dispute any errors. Aim for 640+ for best rates. ### 2. **Calculate Your Budget** Use our calculators to determine realistic affordability: - [Affordability Calculator](/calculators/affordability) - [Rent vs Buy Calculator](/calculators/rent-vs-buy) - [Interest-Only Calculator](/calculators/interest-only) ### 3. **Explore Loan Options** Understand which mortgage type fits your situation: - [Understanding Your Mortgage Options](/blog/understanding-mortgage-options-new-homeowner) - [First-Time Homebuyer's Guide to NON-QM Loans](/blog/first-time-homebuyer-guide-non-qm-loans) ### 4. **Get Pre-Approved** Contact lenders and get pre-approved (not just pre-qualified): **For NON-QM Loans (self-employed, gig workers, foreign nationals):** - **NS Funding:** (800) 917-1595 - [Apply Online](/apply) **For Conventional/FHA/VA:** - Shop at least 3 lenders ### 5. **Download Resources** - [NON-QM Loan Qualification Checklist](/resources/forms-documents) - [Document Preparation Guide](/resources/forms-documents) - [Mortgage Glossary](/resources/mortgage-glossary) --- ## Why Choose NS Funding? At NS Funding, we specialize in helping first-time homebuyers with non-traditional income qualify for mortgages: - **$500M+ in funded loans** - **2,000+ satisfied clients** - **15+ years of NON-QM expertise** - **Licensed in 19 states** - **Fast approvals** (24-hour pre-qualification) - **Flexible guidelines** for self-employed, gig workers, and foreign nationals - **Competitive rates** starting at 7.00% **Ready to start your homebuying journey?** Call **(800) 917-1595** or [apply online today](/apply). --- *Disclaimer: This article is for educational purposes only and does not constitute financial advice. Loan terms, rates, and requirements are subject to change and vary by lender, borrower qualifications, and property type. Always consult with a licensed mortgage professional to discuss your specific situation.*