Purchasing your first home is an exciting milestone in your life. When it happens, it is likely going to be the biggest, and it is very easy to allow emotions and oversights to get in the way of making a sound financial decision.
In addition to buying the home, there is also the issue of the first time home buyer mortgage loan process. This can be a complex and sometimes challenging part of the home buying process, but taking the time to do your research and avoiding common mistakes can result in thousands of dollars of savings over the term of the loan.
Not Budgeting For Everything
Unlike renting, where you pay a flat rate for the use of the property and then pay the bills as stipulated in your rental agreement, the cost of owning a home includes a lot more. In addition to the monthly payment required by the first time home buyer mortgage loan, it will also be important to budget for:
* Homeowner’s insurance
* Closing costs
* PMI (Private Mortgage Insurance) which will be required if the down payment is less than 20% for most buyers
* All expenses for the home (water, garbage, power, sewer, etc.)
* Home maintenance and repairs, which should be considered at about 1-3% of the cost of the home
Typically, a first time home buyer mortgage loan will be pre-approved to a maximum amount. This is not the maximum amount that will fit your budget; it is the full amount the lender will provide. Often buying a home at the maximum amount will create a financial problem for the home buyer.
Not Comparing Lenders
Not all lenders off the same mortgage rates and packages as other lenders. By comparing different loan providers both online and in person, it will be easy to determine which company will offer the best rates, costs, and features that make the loan the best choice.
If you are in the market for a first time home buyer mortgage loan, compare the rates and loan options available at Guaranteed Rate. To talk to our loan experts, see us online at www.guaranteedrate.com/buying-home/first-time-home-buyer
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