How to avoid 5 mistakes that First-time Homebuyers (FTHB) do?
A new home brings lots of happiness, excitement, and positivity in our lives. From the day you dream of owning a house to the day you start living there, the journey is either smooth or a roller-coaster ride for the homebuyers. The paperwork, permissions, mortgage approvals, shifting, and managing the monthly installments can be tricky. Amidst these challenges, First-time homebuyers often make mistakes they could have avoided. Since it’s for the first time they get into the process for real, the challenges feel like a burden too heavy to carry. This makes FTHB panic, and they often try to complete the process fast. This quick decision costs a lot to them later. In the end, buying a home is a high-end investment, and such decisions require a well-informed person by your side. First time home buyer programs MA are getting popular still, you must see other factors of homebuying too.
Today, people can access information from anywhere. First-time homebuyers must stay informed and make the right choices. Here’s a list of few mistakes that you, as an FTHB, can avoid.
Not figuring out the affordability
Everyone dreams of having a big bungalow or at least a spacious home. When FTHB starts looking for a home, they visit many properties clearly out of their budget. They don’t work on thoroughly calculating their budget. Even if you are planning to take a loan, a financial analysis is needed to check your affordable home range. Spending time on properties beyond budget is a waste of time & energy. You can calculate your mortgage with here or consult a mortgage expert for detailed analysis.
Checking only one Mortgage Option
Mortgage plans are not standardized. Various lenders offer various mortgage interest rates. The closing costs and the discount can also vary. Hence, it becomes crucial for first-time homebuyers to stay informed and research the different options available. You can take advice from mortgage consultants to check the best options for you. They can let you know about not just one but multiple suitable plans for you. In fact, you can do it yourself by applying for a mortgage with multiple lenders. You will be surprised to see the drastic differences in mortgage rates. Mortgage providers give additional relief in some of their FTHB loan policies. So, it’s better to check with multiple lenders than fixing the deal with the first mortgage option you come across.
Not fixing the Credit Score
Unless you are a wealthy person, taking a mortgage is inevitable in home buying. The financing challenges for First-time homebuyers start with the evaluation of their credit score. A credit score helps mortgage lenders to determine the trustworthiness of the homebuyer. Since the investment is huge, mortgage lenders like to play safe. They scrutinize the loan applicant’s credit score to approve or reject their loan. Hence, a good credit score is a key to smooth mortgage approval, especially in the first-time homebuyers’ case. You can maintain a good credit score by making due payments on time. Also, any error in credit score can cost you more than you need to pay. Request a free credit report and see if there is an error. Report to the concerned organization for the error and get it fixed before applying for the mortgage. Do not let the credit score let your dreams down. Be ready!
Making Small Downpayments
Mortgage empowers the homebuyer to make their dream home happen finally. The more substantial portion gets covered in the mortgage interest, and around 20% downpayment is expected from the first-time homebuyer. The FTHB Mortgage plans also give options for zero percent to 3 or 3.5% of downpayment. The FTHB often finds giving the lesser downpayment in the initial stage. While it seems easy, most of the homebuyers regret their decision. Less down payment means more loans and higher interest monthly EMI. It may keep homebuyers in constant pressure throughout the tenure. So, try to wait till you save sufficient to make a higher downpayment. Well, waiting too much can also increase the property & mortgage rates. You must try to ease your monthly EMI costs and balance expenses, and the rest will work out.
Not looking for FTHB Programs
Being a first-time homebuyer, let’s assume you haven’t saved much for the downpayment but can manage the monthly EMIs well. There are many FTHB Mortgage & Loan options available nowadays. You can ask your mortgage consultant to find a suitable loan option for you. The downpayment under such a loan goes from 0% to 3 or 3.5%. The plans vary and have specific eligibility criteria. Do check your eligibility under VA, USDA, FHA loan programs. You may also qualify for added home renewal protection in some mortgage options. So, it is better to explore your opportunities and make an informed decision. After all, it’s about your first home!
Looking for an ideal home & a suitable mortgage option is a tiring process. Your heart wishes to rush for a lavish house, but your brain asks you to stop and keep finances into consideration. While you look for a dream house, Drew Mortgage, a mortgage lender company in Massachusetts, can help you crack the right mortgage deal fast. Talk to our mortgage consultants and explore your mortgage & loan avenues with us. Feel free to connect soon!