Avoiding First-Time Homebuyer Mortgage Pitfalls, Part 2

In part one of this two-part blog series, we went over some of the common mistakes some first-time homebuyers make and how you can avoid these. There are several important parts to the mortgage application and homebuying process, and a trusted loan officer will go a long way toward assisting you with elements you aren’t familiar with.

At Altius Mortgage and our partners with Mortgage Ogden, we’re proud to offer a wide variety of home loan options for first-time homebuyers, whether you’re an individual, couple or family looking to purchase their initial home. In today’s part two of our series, we’ll go over a few other pitfalls to steer clear of during this process, including several our loan officers will assist you with and answer any questions on.

Escrow Misunderstandings

During many mortgages and home sale situations, escrow will be used – and may be very new to first-time buyers. Escrow refers to earnest or “good faith” money that the buyer puts down to the seller in exchange for the seller taking the property off the market for negotiation purposes. This money is held by a third party. If the sale goes through, these funds will be used for property taxes moving forward.

It’s important to know why escrow is being used and who is holding the money. If you’re unsure of any of the details here, speak to your loan officer before consenting or sending any money into escrow.

Closing Errors

There are a few errors to avoid when it comes to closing your home purchase and beginning your monthly mortgage payments:

• Underestimating closing costs: Closing costs feature areas like lawyer fees, title changes and related costs that are often paid during or directly after the home purchase. You will need to have funds remaining to pay for these costs, so don’t exhaust your savings.
• Not using discount points: You can gain savings on your interest rate by using mortgage discount points, or optional fees you pay ahead of time.
• Monthly expense miscalculation: It’s also vital to know what your monthly housing payment will be moving forward – including not only the mortgage itself, but also areas like property taxes, utilities and HOA fees (if applicable).

No Home Inspection

Finally, no buyer should ever complete a home purchase without a third-party inspection from a professional home inspector. This individual will inspect both the interior and exterior, helping locate any hidden issues or concerns that should be remedied by the seller in advance of the sale. Many inspections save buyers thousands of dollars, and they’re relatively affordable, so they should never be skipped.

For more on avoiding first-time homebuyer mistakes, or to learn about any of our mortgage services, speak to the staff at Altius Mortgage today.