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First Time Home Buyers

 

Buying a home can be nerve-racking, especially if you're a first-time home buyer.

Let me help you navigate the process without the headaches.

Working with 1st time home buyers is a huge responsibility I do not take lightly. I remember what it was like to purchase my first home in 2010 with my wife and how stressful and confusing the process seemed to be. I was not in the mortgage industry at that time and just wanted everything to be DONE! But now looking back at the process, it’s not hard to see why it was a crazy mess. There was no structure, no process, no reasoning behind what was being done. No education, no advice, no guidance.

 

With the backing of 6 years experience and $52,500,000 in transactions, I have developed a proven system that provides an exceptional home buying experience. By educating 1st time homebuyers on topics like credit, down payment and debt to income ratio, and then also giving them the freedom to choose the best mortgage option that will fulfill their short term and long term financial goals, you will shop confidently for the RIGHT home for you and your family.

 

Here are six common mistakes first-time homebuyers should avoid:

More to it than mortgage payments

 

Many first-time homebuyers decide to buy when they feel ready for a mortgage. But just because they can afford the mortgage payments doesn’t mean they can afford to own a home, says New York attorney Rafael Castellanos, president of Expert Title Insurance. “They have an idea of what their mortgage payment is going to be, but they don’t realize there’s much more to it,” he says. Property insurance, taxes, homeowner’s association dues, maintenance, and higher electric and water bills are some of the costs that first-time homebuyers tend to overlook when shopping for a place.

 

“Keep in mind property taxes and insurance have a tendency of going up every year,” Castellanos says. “Even if you can afford it now, ask yourself if you’ll be able to afford the increased costs later.”

 

Looking for a home first and a loan later

 

Home buying doesn’t begin with home searching. It begins with a mortgage preapproval — unless you’re lucky to have enough money to pay cash for your first house.

 

Often, first-time homebuyers “are afraid to get prequalified,” says Steve Anderson, a broker and owner at Re/Max Benchmark Realty in Las Vegas. They fear the lender may tell them they don’t qualify for a mortgage or they qualify for a loan smaller than expected. “So they pick a price range out of the sky and say, ‘Let’s go look for a house,'” Anderson says.

 

And that’s not how it should be done. Yes, it’s more fun to go look at houses than to sit in a lender’s office where you have to expose your financial situation. But that’s a backward approach, says Ed Conarchy, a mortgage planner and investment adviser at Cherry Creek Mortgage in Gurnee, Illinois.

 

“You get preapproved, and then you find a home,” he says. “That way, you’ll make a financial decision versus an emotional decision."

 

Not getting professional help

 

Venturing into this process alone, without professional help, is not a good idea. While every rule has its exception, generally, first-time homebuyers should not try to deal directly with the listing agent, Anderson says.

 

“If you are getting divorced, are you going to go to your husband’s attorney for help? Of course not,” he says. “Same here. If you go to a listing agent, they are only going to show you their listings. You must find a buyer’s agent to help you.”

Using up savings on the down payment

 

Spending all or most of their savings on the down payment and closing costs is one of the biggest mistakes first-time homebuyers make, Conarchy says.

 

“Some people scrape all their money together to make the 20 percent down payment so they don’t have to pay for mortgage insurance, but they are picking the wrong poison because they are left with no savings at all,” he says.

 

Homebuyers who put 20 percent or more down don’t have to pay for mortgage insurance when getting a conventional mortgage. That’s usually translated into substantial savings on the monthly mortgage payment. But it’s not worth the risk of living on the edge, Conarchy says.

 

“I’d take paying for mortgage insurance any day over not having money for rainy days,” he says. “Everyone — especially homeowners — needs to have a rainy-day fund.”

 

Getting new loans before the deal is closed

 

You have prequalified for a loan. You found the house you wanted. The contract is signed and the closing is in 30 days. Don’t celebrate by financing another big purchase.

 

Lenders pull credit reports before the closing to make sure the borrower’s financial situation has not changed since the loan was approved. Any new loans on your credit report can jeopardize the closing.

 

Buyers, especially first-timers, often learn this lesson the hard way.

 

Not maximizing their credit score

 

Your credit score is directly tied to your interest rate and how good of a deal you get on your mortgage. First time buyers sometimes fail to make sure their credit score is as high as possible. If you can improve your credit score by as little as 20 points, it can have a big impact on your interest rate, potentially saving you thousands of dollars in interest.

 

Let me help you with this! Once I have your completed application, I’ll run our credit simulator to see if there is anything you can do quickly to raise your scores.