The majority of first-time home buyers tend to make an error when they purchase their first home. In this digital era, new home buyers can avoid making such errors.
Not determining their affordability
Without any idea of how much you can afford is just a waste of time and energy. You can end up choosing a home, which is unaffordable or visit houses that are lower than your ideal price level. The goal of a first time home buyer is to just buy a home with a loan offering comfortable monthly payment. It is good to target low!
The mortgage affordability calculator available on www.sammamishmortgage.com/calculators-and-tools can help you determine the affordable price range.
Requesting for a single quote
Go mortgage hunting just like you go shopping for expensive appliances or a car. Comparison shopping makes a difference. Mortgage interest differs from one lender to another, so do fees like discount points and closing costs.
Request a quote from several mortgage lenders. Mortgage applications made within a 45-day window do not damage your credit score because each one is counted under a single credit inquiry.
Overlooking credit reports
Lenders review your credit reports to determine how much loan to approve, its interest rates and the terms. If your credit has errors, then your interest quotes will be higher than you deserve. Therefore, check thoroughly to see if the reports are accurate or not.
Every year request free credit reports from main credit bureaus. If errors are identified, then you can dispute for correction.
Too small down payment
Generally, 20% down payment is needed but some lenders allow first-time buyers program that permits as less as 3%. Less than 20% possibly indicates a high cost on insurance and interest payment.
Big down payments mean small mortgage and affordable monthly installments. So, determine a goal amount for the down payment and start saving. Another concern is that if you wait then the rising property and mortgage rates may make it hard for you to buy a home. The solution here is to ensure that the down payment you have allows securing a mortgage plan you are comfortable to reimburse each month.
Ignoring first-time home buyers’ program
First-time home buyers will possibly not have lots of savings for a down payment as well as closing cost. It doesn’t mean you will need to delay homeownership as you save a huge amount for down payment. You just need to check low down payment home loan programs suitable for first-time homebuyers made accessible in your state.
Learn about the different government programs with little or zero down including the VA, FHA, and the USDA loans.
Not aware of the mortgage discount points
Loan discount points are the fees paid upfront to decrease the interest rate, which is significant. If your goal is to male low-down payment, then never buy discount points. Buying points is a wise choice when you plan to live longer in the home and have sufficient money on-hand for a down payment.
Miscalculation of repair or renovation costs, new credit application before the closing of the sale, and spending all your savings [nothing left for emergencies like unexpected repairs] are also some aspects that get ignored.
Get familiar with the real cost of owning a home!