Buying your first home is an exciting time but there is a lot to know before you jump right in. With a little bit of preparation and research, your first-time home buying experience can be a positive one. Here are a few common mortgage mistakes first-time Jersey Shore homebuyers make.
Home Shopping Before Mortgage Shopping
There is nothing more heartbreaking than finding your Jersey Shore dream home only to discover that it’s not in the budget. Before searching for your first home along the shore, have your financing in order. At least three months before you start your home search start meeting with mortgage lenders to determine how much of a home you can afford and to get pre-qualified. Be prepared to provide lots of paperwork from old tax returns to current proof of income. You may learn that by paying down some debt now you can improve your current credit score and make buying a home down the road more affordable.
Not Shopping Around
Not shopping around for a mortgage is not just a first-time homebuyer mistake. In fact, nearly half of homebuyers admit to not shopping around before buying a home. However, failing to shop around could cost you. A 30-year fixed-rate mortgage interest rate can be as much as a half percent difference between lenders. Let’s say you secure a rate of 4.0% compared to 4.5% – that could save you as much as $60 a month. That may not seem like a lot but over the life of your loan it quickly adds up. All loans are not created equal. You need to compare loans. You might be offered a lower interest rate, but is that because the fees are so much higher it offsets the lower rate? When comparing loans look at the actual annual percentage rate, or APR, not just at the low interest rate. The APR can easily be found on the “loan estimate” that all lenders should be providing you.
When getting qualified for a loan, lenders will qualify you on what you can afford. This is determined by your debt-to-income ratio on a monthly basis. However, what they don’t take into consideration is what you spend your money on. Don’t make the mistake of buying a home that leaves you with no extra money to do the things you love. While the lender says you may be able to afford it, is it worth going without nights out with friends, your daily Starbucks or getting rid of your gym membership? To know what you can truly afford track your spending for a few months to see where your money goes. Decide from there what amount of a mortgage you are willing to take on.
Not Understanding The Paperwork
When it comes to buying a home there is a lot of paperwork involved and it can be overwhelming. An experienced real estate agent will help you with understanding everything they are having you sign. You want the same from your lender. Look over your loan estimate carefully to see what your APR will be, what you can expect your monthly payment to be, the length of the loan, and if the rate is fixed or adjustable. Pay close attention to how much money you will need to bring to closing as well. Throughout the home buying process pay attention to every document and don’t hesitate to ask questions if there is something you don’t understand.
Buying a home is for many the biggest financial decision they will make. You want the best on your side throughout the whole process. The Ferzoco Group is made up of only the best and most experienced real estate agents, who are here to work for you. Contact us today via email or contact us directly at (609) 399-5454 to see how we can help.