Buying your first home is the most important financial milestone in the life of the average American, and it’s worth making sure that you do it right. However, people often go wrong when they try to buy their first home. With a little help from Matt Dejanovich, you can rest assured you’ll avoid first-time homebuyer mistakes and set yourself up to succeed.
Only Talking to a Single Mortgage Lender
In today’s market, you’ll find it all but impossible to get your offer taken seriously without a mortgage pre-approval. Sellers won’t be willing to take a risk on someone who isn’t certain they can get a mortgage, especially if there are other offers on the table.
It’s always a good idea to take your financial information, credit report, etc. to multiple lenders and get a variety of opinions. Talking exclusively to one lender amounts to denying yourself useful perspectives that can help you in buying a house you can afford.
Not Considering VA, FDA, or FHA Loans
First-time home buyers may be strapped for cash in this era of rising home prices, and if you have little set aside for a down payment or your credit score leaves something to be desired, you may have a hard time qualifying for a conventional loan.
Consider the possibility of a government loan program. If you’re a veteran, Veterans Affairs (VA) loans have incredibly generous terms available that you can consider. Likewise, the Federal Housing Administration (FDA) offers excellent home-buying possibilities for rural homebuyers with their own program. The FHA is dedicated to helping Americans become homeowners, and they’re a third option if you lack the circumstantial qualifications necessary for other programs.
Compromising Savings to Put Down 20%
There are several expenses to go alongside monthly mortgage payments, such as property taxes, interest, and homeowners insurance. If you put down less than 20%, you’ll also have to pay for private mortgage insurance. This expense is considerable over the lifetime of a mortgage, but saving on it by putting down 20% or more isn’t worth jeopardizing your financial security. You’re better off paying private mortgage insurance if that’s what it takes to maintain a 3-6 month emergency fund.
Avoiding a Fixed-Rate Mortgage
There are many types of mortgages beyond the classic fixed-rate model. For instance, you might choose a variable rate mortgage in the hope that you’ll save money when interest rates go down in the future. However, this can make things harder for you should interest rates rise in the future. Avoid the first-time homebuyer mistake of making things too complicated, and play it safe by using a fixed mortgage rate loan when buying a home.
For more information about common first-time homebuyer mistakes, the difference between an appraisal and a home inspection, or homes for sale in Dexter, MI, reach out to real estate agent Matt Dejanovich today!