As a first-time homebuyer, there will be several elements of the mortgage and home search process that may be unfamiliar to you. It pays to have an ideal loan officer on your side who has experience with the process and can guide you through it, helping you check the right boxes while avoiding pitfalls.
At Altius Mortgage and our partners at Mortgage Ogden, we’re proud to offer a wide range of home loan options to first-time homebuyers, plus numerous areas of expertise to assist you with parts of the process you’re unsure of – including avoiding some of the common mistakes sometimes made by first-timers on the market. This two-part blog will go over some of the most frequent such errors we’ve seen throughout the years, plus advise you on the proper approach in several of these important areas.
Home Before Mortgage
While we know it’s tempting to be scouring the market for homes in your area the moment you decide it’s time to buy, you must resist this urge until you’ve begun the mortgage pre-approval or pre-qualification process, at the very minimum. This is because the home market is constantly changing and evolving – homes might fly off the market before you’ve completed your mortgage in many cases, or could change in price.
More importantly, starting the mortgage process allows you to understand your own purchasing power through the kinds of home loan programs and rates you qualify for. Without this knowledge, you might be spending significant time investigating homes that will be outside your budgetary range, which is simply a waste of your time.
Credit Score and Other Prep Issues
A mortgage application is an area that often requires some advanced prep in terms of your finances, and one key area here is your credit score. You should be checking your score well in advance, plus auditing it for any possible mistakes if you think they might be present and artificially lowering your score.
In addition, be sure you have other financial documents like tax returns, pay stubs or other account statements available and up to speed.
Lacking Down Payment
Another vital prep element is saving up funds for a down payment, which will vary depending on the program you qualify for. Standard down payments are 20% of the purchase price, but there are many first-timer programs, such as FHA loans, that allow for lower amounts – but may also come with mortgage insurance requirements. Wherever possible, try to build up as much money as you can for a down payment to avoid larger interest and insurance payments through the life of your loan.
There are several incentives possibly available that you should not miss out on:
- First-home incentives: Various organizations, government entities and even regions offer programs to incentivize first-time buyers, from discount housing to ideal loan terms or improved financial services.
- FHA loans: Backed by the Federal Housing Administration and complete with much lower rates and down payments.
- VA loans: For veterans, spouses and active military members.
- USDA incentives: For rural buyers, farmers and similar individuals.
For more on avoiding mistakes as a first-time homebuyer, or to learn about any of our mortgage loan services, speak to the staff at Altius Mortgage today.