Everything doesn’t necessarily have to be perfect for buying a house to make sense.
- Many years ago, I purchased my first home.
- I made several mistakes, including not shopping around before getting my mortgage.
- I don’t regret the purchase because I made a profit on selling the house despite the errors.
When I purchased my first house many years ago, I wasn’t very experienced financially and I made some bad decisions during the buying process. Unfortunately, this ended up making my monthly mortgage payments cost more than they would have if I’d made better choices.
Despite the errors I made during the purchasing process, I do not regret buying that first home. Here’s why.
These are the big mistakes I made
There were two big mistakes I made when I bought my first house:
- I did not shop around for my mortgage loan: My real estate agent at the time recommended that I work with a specific mortgage lender that she had worked with in the past. I took her advice and contacted only that lender and no others. Unfortunately, this means I missed out on the opportunity to compare different interest rates. It’s very likely that I ended up paying more interest than necessary since I didn’t shop around. The lender also gave us a lot of hassle during the application process, which made the transaction more stressful than it needed to be.
- I made a small down payment: I put down only 10% on the house, which my realtor encouraged and my mortgage lender allowed. Because of my small down payment, I had to pay several hundred dollars per month for private mortgage insurance. This insurance didn’t protect me if I stopped being able to make payments, but it did protect my lender if a foreclosure occurred. If foreclosure happened, the lender would not face uncompensated losses due to the PMI I was paying for.
Together, both the PMI cost and the fact I likely got stuck with a higher interest rate than I should have, made my home purchase much more expensive each month and over time.
This is the very good reason why I don’t regret the purchase
Despite these mistakes, I do not regret buying my first house. That’s because I owned it for several years and then sold it for a very substantial profit that was enough to give me a hefty down payment for my next home.
Ultimately, because of the fact that the property went up in value and I was able to sell it for more than I paid for it, the purchase was a good decision that helped me build long-term wealth.
Now, just because everything worked out well in my situation doesn’t mean that will be the case for everyone who makes home-buying errors. Ideally, it’s best to make sure you shop around to get the lowest possible mortgage rate and to make a larger down payment.
But, the reality is, we don’t live in an ideal world. You may need to buy when rates are on the upswing or before you have the money to put down 20%. And, as my situation shows, properties tend to go up in value over time and sometimes a purchase can work out even if it’s not made under ideal conditions.
As long as you make a wise choice about your purchase, don’t overpay for your home, and are sure you can comfortably afford the payments, you stand a good chance of your home purchase paying off in the end.
The Ascent’s Best Mortgage Lender of 2022
Mortgage rates are on the rise — and fast. But they’re still relatively low by historical standards. So, if you want to take advantage of rates before they climb too high, you’ll want to find a lender who can help you secure the best rate possible.
That is where Better Mortgage comes in.
You can get pre-approved in as little as 3 minutes, with no hard credit check, and lock your rate at any time. Another plus? They don’t charge origination or lender fees (which can be as high as 2% of the loan amount for some lenders).
Read our free review