3 Facts That Surprise Most First-Time Home Buyers


Buying your first home can be an exciting process. From working with a lender to find a mortgage designed for first-time buyers to scouring the Internet and classifieds for that perfect place to call home, it is easy to see the stressful nature of buying a house. Unfortunately, most first time buyers do not do adequate research when it comes to buying real estate. If you are considering buying your first home, use this guide to avoid being shocked during the buying process.

Pre-Qualified Is Not Pre-Approved

Your bank or another lender may pre-qualify you for a specific mortgage amount, giving you an idea on how much house a mortgage lender believes you can afford. You will discuss your credit score, total income, and any assets with your lender before they pre-qualify you for a mortgage. This pre-qualification is based on what you tell your lender, but the pre-qualification is not the same as a pre-approval.

Your lender will need to verify your credit score and income before issuing an actual pre-approval. Be sure to give your lender accurate information during this process. This will reduce your risk of making an offer on a home that you will not actually be able to purchase. To avoid any issues, consider getting a pre-approval before making an offer.

Rates Vary

The process to buy a home can be time-consuming. Your lender may approve you at one rate during your pre-approval process. However, mortgage rates change each day, so your rate at the time of the pre-approval may increase or decrease as you near your closing day.

If you are content with your rate, ask your lender about locking in when you are within 30, 45, or 60 days from your closing. In some instances, you may need to pay points to lock in the rate, so you will need to calculate if the point fee is worth the interest savings.

Forgetting Escrow

Most first time buyers are surprised to learn that their mortgage payments will be higher than they initially expected. This payment increase is due to the addition of insurance and real estate taxes. Known as an escrow, the additional amount in your mortgage payment is placed into a separate account to pay your annual homeowner's insurance premium and real estate taxes.

If you pay more than 20 percent down on your home, you can waive escrow and pay your insurance and taxes directly. Unfortunately, your lender may consider this option risky and only approve your mortgage at a higher interest rate.

Paying towards your escrow account each month may not seem ideal, but it is a smarter alternative to paying a higher interest rate and large insurance and tax payments at the end of the year.

Buying your first home can be complicated, but proper understanding will help make this first purchase a success. Using this guide, you can be a successful first time homebuyer. 


9 August 2016

Prioritizing Your Wish List

After I decided to buy a new home, I realized that I probably needed to prioritize the things on my wish list. Since I am not wealthy, I realized that I probably couldn't get everything that I wanted out of a single home--at least, not this time around. Fortunately, I worked with an incredible real estate agent who helped me to figure out which type of property would pay off in the end. Finding a home took a lot of time, but I am really pleased that I found the right one. This blog is all about learning to prioritize your home hunting wish list so that you can have the home and financial situation of your dreams.