Buying your first home can be (but shouldn’t be) an intimidating process. Many buyers make mistakes when purchasing their first home because they don’t know enough about the mortgage market or what to expect when applying for a loan; however, there are many resources for first time homebuyers that make the buying process much easier and more affordable. Below we will explain 5 common mistakes made by first time homebuyers as well as how to avoid them.
- 1. Passing up professional help: Buying a home consists of many steps. Luckily, professionals are available no matter where you’re located in the country. Some of the most important industry specialists you may consider hiring include a housing counselor, real estate professional, lender, and insurance agent. Many people try to avoid incorporating any and all of these experts into their home buying process, as they expect a high bill and lengthened buying period—this is not the case! These professionals will ultimately save you tons of time and money; so don’t hesitate to reach out for help at any point in the process.
- 2. Thinking you make too much money for qualification: Many buyers believe that assistance programs are only for low-income buyers. There are some programs, however, that help cover closing costs for first time buyers, regardless of their income. Do your research to see if these programs are available in your area. A local lender will be able to help determine the best programs for your personal home buying needs.
- 3. Thinking you haven’t saved enough money for a down payment: Many prospective buyers believe they need more money than necessary to purchase a home; they believe the biggest thing preventing them from becoming a homeowner is the size of the down payment. The Freddie Mac Home Possible Advantage Mortgage, however, allows homebuyers to make a down payment of 3%. This low percentage of money down will allow many borrowers to enter this program with little cash out of pocket for the down payment!
- 4. Adhering to outdated closing timelines: Prior to September of 2015, when the last rule was added to the Know Before You Owe mortgage initiative, many homebuyers inadequately understood the terms of their loans. Since then, homebuyers have found themselves with fewer unexpected payments, as they continue to make more informed mortgage selections. Due to this act, it’s very important to get the required paperwork to your lender immediately and not to wait until the last minute. The Know Before you Owe initiative has not only increased the days required before closing by three days, allowing buyers to review any changes made to their loan terms, but it has also required lenders to complete their tasks three days earlier—so don’t wait!
- 5. Depending on a one-size-fits-all loan: Standard 30-year loans are a thing of the past. Today, loan officers personalize each loan term depending on the financial situation and long-term goals of the borrower. Contact a mortgage loan officer to determine your potential loan term today!
With endless resources available to first time homebuyers, purchasing your first home is actually a simple process! For more information on how to avoid these common mistakes, contact a home mortgage specialist today.