Being a first time home buyer can be confusing; not knowing where to start, having lots of questions about the process, and determining your eligibility can be overwhelming. The Future Home Loans team, locally owned and operated in Jacksonville Beach, is here to guide you through the process! Let’s take a look at three major mistakes first-time home buyers make and how to avoid them.
Not Looking For First Time Home Buyer Programs
As a first time home buyer, you may not have a ton of money saved up for the down payment and closing costs required to close on your home. But don’t make the error of assuming that you have to delay homeownership while saving for a huge down payment.
How To Avoid This Mistake: Ask one of our professional mortgage brokers about your first-time home buyer options and look for programs in your state. You might qualify for one guaranteed by the Department of Veterans Affairs that doesn’t require a down payment. Federal Housing Administration loans have a minimum down payment of 3.5%, and some conventional loan programs allow for down payments as low as 3%!
Ignoring VA and FHA Loan Programs
A lot of first-time home buyers want to or need to make a smaller down payment but they don’t always know the details of government-backed programs. Here’s some pertinent information on government loans.
How To Avoid This Mistake: Learning about the following programs.
VA Loans: Mortgages guaranteed by the U.S. Department of Veterans Affairs. They’re for people who have served in the military. VA loans’ claim to fame is that they allow qualified home buyers to put zero percent down and get 100% financing. Borrowers pay a funding fee in lieu of mortgage insurance.
FHA Loans: This mortgage type allows for down payments as low as 3.5%! What’s more, the Federal Housing Administration can be forgiving of imperfect credit. When you get an FHA Loan, you pay mortgage insurance for the life of the mortgage, even after you have more than 20% equity.
Applying For Credit Before The Sale Is Final
One day, you apply for a mortgage. A few weeks later, you close, or finalize, the loan and get the keys to the house. The period between is critical: You want to leave your credit alone as much as possible. It’s a mistake to get a new credit card, buy furniture or appliances on credit, or take out an auto loan before the mortgage closes. The lender’s mortgage decision is based on your credit score and your debt-to-income ratio, which is the percentage of your income that goes toward monthly debt payments. Getting a new loan, or adding to your monthly debt payments, will increase your debt-to-income ratio. Neither of those are good from the mortgage lender’s perspective.
How to Avoid This Mistake: Prior to the pursuit of home-buying, it goes without saying that your wallet needs to be ready for unexpected hiccups along the way. Taking out further credit lines, or adding onto outstanding debts, will only decrease your likelihood of you reaching your dreams of home ownership! Having a security fund of cash that is reserved for emergencies can help save you the headache during the process of a home purchase.
The market is HOT and Future Home Loans is armed and ready to get you into the home of your dreams, while guiding you through the process. Currently, we have access to exclusive savings for you via Conquest Mortgage. We’re seeing VA interest rates between 2.25%-2.375% and conventional interest rates between 2.5-2.99% meaning, you can save BIG! These rates are exclusive to mortgage brokers, meaning, no bank or lending institution can provide you with these historical rates. Ready to make the move to North Florida? Future Home Loans is prepared to assist you on your home-buying journey! Let’s get started today.
