Buying a home for the first time is quite tough but exciting. Being quite nervous and anxious, you may ignore some helpful advice for buying property and as a result, you need to carry the burden for a lifetime. This is quite easy and common to get swept up in the land of home shopping and make mistakes.
Knowledge is power. First-time home buyer Richmond Hill, suggests Knowing the most common mistakes that every first-time home buyers make, will help you in enjoying the return in the future. To help you here, the top common mistakes of first-time home buyers are described below.
Before you target for buying a home, make sure how much you can afford. Don’t look at the houses that you can’t afford or which is below from your optimal price level. Just like the other people, don’t go for a house that makes you sleepless at night thinking about the monthly payment. Rather, keep your aim low. In that case, you can use a mortgage affordability calculator to know the best price range available for you.
Making a too small down payment
There are so many loan programs that offer 0 to 3.5 percent down. In a recent survey, it is seen that one in nine homeowners under 35 age has regretted not making enough down payment. Always remember, these bigger down payments make the mortgage similar. You may take time to save money while making the down payment. But once it will be more difficult to buy the home as the home price and mortgage price is rising. The down payment is an easy option to secure the monthly payment that is comfortable for you.
Speaking with only one lender
Most of the first home buyers go to the personal bank and ask for a mortgage from them. Necessarily this is not a bad idea. But why you will stop here? The mortgage rates are highly personalized and it depends on market factors and personal finances also. Talking with multiple lenders in the market can open up the different rates going in the market and fees from each. No doubt, it will help you to select the right mortgage with the lowest interest rate.
Taking out an adjustable-rate mortgage instead of a fixed one
If you don’t have sufficient cash lying around, then most probably you will have two options from First-time home buyer Richmond Hill such as adjustable-rate mortgage and a fixed-rate mortgage. The repayment period may also vary such as 10, 15, or 20 years. 30 years fixed rate is used most commonly. The fixed-rate mortgage doesn’t matter on the duration of the mortgage term. Most of the homeowners like it make the monthly calculation cost.
In ARM, you need to be a stick in a low and fixed interest rate for some years. After that, the rate will be adjusted on a market index, so it may change with the stock market. However, you can also pay less with an ARM when the market is good and also you may need to pay a lot when the market is not working in your favor.
ARM was popular in the early 2000s. It attracted the borrowers when the interest rate was high. These are a good option for them who want to hold real estate for a short period.
Ignoring the VA, USDA and FHA loan
A conventional loan is the most popular option for first time home buyers. So most of the time they forget about the VA, USDA, and FHA loan options. These are also the most affordable options for you. If you miss these loan options, then you can miss some of the attractive benefits like no down payment, lower credit score requirements, and no mortgage insurance.
Try to know about these loan options and compare them with your selected loan option. To make you understand, here’s quick rundown is elaborated.
● VA loan allows in qualifying the credit score and higher debit option. Here you don’t require any down payment and any mortgage insurance. To avail of this loan option, you need to be eligible from the VA.
● USDA loan doesn’t need any down payment and you can roll your closing cost here. As per the U.S. Agriculture Department, the loan holder needs a minimum FICO score of 640 and it needs to be located in any rural area.
● FHA loan is for them who has financial issues or struggling to get loans. To avail FHA loan, you need a minimum score of 580.
Now you know what the mistakes can be and how you can solve them. So, don’t worry. Start your research for getting the best property in your desired area and avoid the most common mistakes as per the suggestion of First-time home buyer Richmond Hill that 90 percent first tone home buyers make.