Buying a home for the first time can be a very daunting experience. If you are not well-prepared you could end up with an unmanageable loan or no loan at all. So, to help avoid these problems, our team at Milend, Inc. have listed five of the most common pitfalls all first-time homebuyers should avoid.
#1. Not Knowing Your Affordability
When beginning the home buying process, it is important to know your affordability. Talk with an Atlanta mortgage lender ahead of time so they can review your finances and let you know what price range to shop in. Knowing this amount can help save time when shopping in the residential market by avoiding homes that are outside your budget. It can also prevent you from stretching your finances to the highest possible limit.
#2. Making Too Small A Down Payment
For most Atlanta mortgages, you should pay at least 20% of your homes down payment. If you put down less than 20%, you will be required to get private mortgage insurance (PMI), which is an additional fee you will have to pay to protect the lender. This insurance is paid for by the borrower but only protects the lender in case the borrower defaults on their mortgage. Therefore, start saving now to avoid these extra fees before you begin the mortgage process.
#3. Making Multiple Large Purchases
Buying a new home does not mean everything else you own has to be brand new. Avoid making large purchases until after your loan is finalized that way your credit score is not affected while your loan is trying to get approved. Your credit score has a big impact on the mortgages you can qualify for and the type of interest rates you will receive. Therefore, pay off loans with high-interest and avoid making multiple large purchases such as a car or boat until later.
#4. Neglecting Government-Backed Loans
Government-backed loans are mortgages that are insured by the government. These loans offer a zero to low down payment requirement and have low-interest rates. You can apply for an FHA loan, a USDA loan, or a VA loan. Talk with your Atlanta mortgage brokers for more information.
#5. Not Shopping Around
You have no financial obligation to commit to the first mortgage lender you talk to. Instead, shop around the market and compare the prices being offered by different lenders. That way you can confidently choose the lender who is offering you the lowest price.
For more information on common pitfalls to avoid as a first-time homebuyer or to get started on your Atlanta mortgage application, please contact Milend, Inc. at 855-645-3631.