Extremely low interest rates are encouraging first-time home buyers to check out the market rather than continuing to rent.
Becky Ivens with Movers Real Estate talked with us about the four biggest mistakes new home buyers can make.
Misunderstanding the importance of a high credit score
Conventional Loan: 720
FHA Loan: 620
Not getting prequalified early enough
It’s never too early to get prequalified.
The most important thing about getting pre-qualified is to use a reputable lender.
Don’t settle for a form letter like anybody can get from an Internet lender.
Get a pre-qualification letter that states the lender has reviewed your credit report.
Be sure the document has a date, the amount you qualify for, and the signature of the loan officer and their phone number.
Spending the maximum on housing
Lenders qualify buyers based on their incomes and debt-to-income ratios without considering how much the borrowers spend on items such as charitable giving, savings, child care, medical expenses, etc.
If it’s not a debt, they don’t consider it.
The wise buyer will ‘consider’ all their expenses and buy well within their means.
Most Buyers are optimistic about the future and excited about buying a home, so they borrow the absolute maximum they can afford instead of allowing themselves wiggle room for a partial loss of income or for future expenses such as children.
Choosing the wrong mortgage product
Mortgages are ‘products’ that you ‘purchase’ and just like any other product, there are different sizes and types.