First-Time Homebuyer? Don’t Make a $30,000 Mistake!
Curb Appeal Is Just the Beginning
So, you can finally afford a mortgage payment and are ready to buy your first home, but the steps involved seem overwhelming. Before becoming a homeowner, you must decide which neighborhood is right for you, find a home that is in your budget and select a knowledgeable realtor that can navigate the daunting process from start to finish. But your very first step should be:
Choose a mortgage company that you would like to work with
Gather all income documents (ie: W-2s, bank statement, tax returns, etc.)
Have the mortgage company’s underwriter review your information
“Don’t make the common mistake of looking for a home first and a loan later,” explains Cody Jacobs, loan officer at AMC Mortgage. “I’ve seen too many times where potential buyers start searching on-line using their projected monthly payment estimates, only to discover later that the payment is out of their price range,” Cody says.
By getting prequalified you eliminate the likelihood of running into income snags midway through the process, after spending hundreds of dollars on home inspections. It also kickstarts the process, meaning you can put in a serious offer quickly showing the seller that you are serious. Once you have signed the contract it will take less time to get your mortgage approved.
How to Choose A Mortgage Company
According to Attom Data Solutions, only 28.8% of homes purchased in 2017 were cash transactions. Unless you are among those lucky few you will need to choose a lender for your mortgage.
Interest rates and loan terms may be similar among lenders, but there are many other aspects you need to find out before choosing your lender.
Questions to Ask a Lender
Are there any document prep fees?
Do they offer any incentives?
What type of loans do they offer?
Many first-time homebuyers make the mistake of spending all or most of their savings on the down-payment and closing costs of their new home. If you don’t have much of a down payment, search for a low down-payment mortgage.
“AMC Mortgage has many programs that offer down payment assistance,” Cody explains. “Your income could be as high as $80,000 a year and still qualify for a low down-payment. Cody also advises to check to make sure your lender offers government-backed programs such as FHA, VA, USDA and FHA 184 for Native Americans.
Compare lender fees. AMC’s standard fee is $995, which covers underwriting, processing, credit report and transcripts.
Now, What About That $30,000 Mistake?
Interest rates are on the incline. Just one year of waiting to buy a house could cost you tens of thousands of dollars. For example, a homebuyer considering a $250,000 home would lose $7,500 if home prices increase by 3% during that one-year timeframe. An additional $21,391 would be lost over the life of a $200,000 mortgage if interest rates increase by .5% during that same one-year period.
Cody advises, “The money you’d lose by waiting a year can be even higher if you are considering a higher-priced home.”
Do Your Homework Before You Begin Your Search
Purchasing your first home is one of the biggest steps you will ever take. It is important to use a reputable real estate company and mortgage lender. McGraw Realtors® has been serving home-buyers in Oklahoma for over 80 years. Partnered with AMC Mortgage, McGraw’s 400+ agents offer impeccable full service from start to finish.
By Rosie Gorrell