What No One Tells First Time Home Buyers About Getting A Mortgage
What do first time home buyers need to know about purchase mortgages and acquiring homes that few ever let them in on?
Surveys have consistently shown that homeowners and renters consider buying a home one of the best and most important moves of their lifetimes. So given the significance of this event it is surprising how much of the home buying process is left a mystery for new first time home buyers.
Here’s a first time home buyer guide telling a number of the things you’ll want to know in order to be prepared, and to ensure the process is smooth, enjoyable, and profitable.
First Time Home Buyer Guide
Interest Rates are Really Complicated
While most first time home buyers may be driven to shop by advertised loan interest rates alone, there are actually many factors that go into calculating the actual interest rates and point combination a specific borrower will qualify for. This includes; credit score, depth of credit history, credit usage, assets, income, employment history, type of income, type of property, loan amount, LTV, property location, and more. So to get a quote with pinpoint accuracy it is important for home buyers to provide as much information as they can and obtain a custom quote.
There are More Closing Costs than You Think
Closings costs and money required to close are frequently higher than first thought. Just plan for this to avoid any surprises later. More significantly first time home buyers will probably be more shocked by the sheer number of charges on the closing statement (more so than the dollar figure). This can be overwhelming to the point of making your head swim the first time you see the list. There are mortgage lender costs, title company fees, insurances, prorated property taxes, and more. Don’t be scared, it’s normal. What’s important is to ask questions until you are clear on what all these items are for. Then you’ll also be better prepared to negotiate the best deal.
Closings Don’t Always Happen on Schedule
Despite having a black and white closing date on your purchase and sales contract there are many things which can cause delays. With this in mind it is always wise to choose a date a little further out than you anticipate you’ll need. Also keep this in mind when giving notice to your old landlord and give yourself some extra days or budget to stay in a hotel for a week in between if needed.
The Process Just Starts When You Sign the Contract
While it can sometimes seem like enough work searching for homes, viewing them and negotiating a deal, this is when the real work behind the scenes gets started. There is the purchase mortgage application to be processed and underwritten, appraisals, home inspections and insurance to be ordered. Then all of this has to be brought together and all parties have to make it to sign on time.
Everything is Negotiable
Don’t be afraid to ask for better deals, the worst that can happen is that you’ll be told no.
There is More to the Cost of Homeownership
There are many, many benefits to homeownership. These benefits are both financial and non-monetary. However, there are other costs to owning a home besides a mortgage payment too. This includes; property taxes and insurance, utilities, lawn care, property maintenance, and sometimes Home Owners Association (HOA) or condo dues too. Just make sure you are aware of all the costs so that you can budget accordingly.
The Right Amount to Follow Up
One of the things no one really tells first time home buyers is how much is the right amount of follow up to do with mortgage lenders and others. Where do you find balance between sabotaging your own mortgage loan application by tying up all of their time on the phone with you, versus not lighting enough of a fire under them to get your deal closed on time? For a start take advantage of any automated status updates provided by email and online. And be sure to get as good of an understanding of the timeline in advance as possible. Don’t be afraid to call and check in if you haven’t heard anything, but try not to let late night panic get the best of you and lead to frantic nonstop calling. These professionals are extremely busy working on your loan and transaction, and will get back to you as soon as possible. The less time they are on the phone with you, the more time they can spend actually progressing your loan to closing.
You Won’t Believe the Amount of Junk Mail You are about to Get
When you move into your new home public records will trip a slew of marketers targeting new home buyers with direct mail. Some of this may be of value, much of it will be scare tactics to get you to sign up for all types of services. Watch your budget.