If you are a soon-to-be first time homebuyer, congratulations! This is a memorable event; one that many people long to achieve. Owning a home provides an endless amount of advantages over renting, perhaps the most important of all being that your money is actually being invested in something. When paying rent you never see a return, but the exact opposite is true for those who make the switch to home ownership.
Unless the housing market tanks when you need to sell, you can always expect at the very least a slight increase in your property value. Equity is something to be cherished, but with this exciting new life venture comes a major responsibility, one that comes in the form of a mortgage.
Committing to a 15, 20, or 30 year, six-figure loan (the average price most first time buyers pay) is no small matter, and as such requires a ton of research and preparation on your part. Adhere to the below advice to ensure you make all the right moves with your mortgage.
Overcoming the trials and tribulations of home loans
You already know the importance of securing a low loan interest rate; given that even a ¼ point difference can affect the amount of interest you pay by thousands of dollars, finding a reputable lender that understands market conditions is absolutely critical. It is this last point that usually throws first time buyers for a loop.
Not all lenders are the same; those touting their ability to get you an ultra low rate may not be the best option in every situation. Generally speaking, the cheaper the lender’s fees, the more complicated and drawn out the mortgage process. Exceptions definitely exist, but staying the cautious course is always highly recommended.
You may encounter issues with communication, underwriting that is performed by 3rd party agents instead of your lender directly, and unexpected setbacks. Remember, the sooner you can close the deal, the better.
Having all your financial ducks in a row will greatly facilitate the paperwork procedure, which means providing an up-to-date record of your income and debts.
Realtors are superb at finding buyers’ dream homes and negotiating the final price of the home (after all, this is their job), but they usually are not experts in determining comparable sales and the affordability for a client. Even the most trusting of agents have their commissions in mind, so it is up to you to know your mortgage budget. Do not hesitate to ask your lender to justify any uncertain fees, as well as if there is room for negotiation.
Above all, your personal financial standing is crucial for obtaining a great mortgage. Verify that you have not missed any payments and that you have a sizable down payment on hand (preferably 20% or more), and remember, when all the forms are filed and signed, do not forget to enjoy yourself in your new home!