After years of apartment dwelling, you’re ready to start the path toward homeownership. For first-time buyers, the experience can be a mix of excitement and the unknown. Unfortunately, this combo may lead to costly mistakes in the home loan process. Here are several common blunders for first-time buyers.
What Are the Top Mistakes for First-Time Buyers Seeking a Home Loan?
1. Not Getting Pre-Qualified
You’ve found a cozy bungalow near your job — it’s the perfect fit and you’re ready to move in immediately. The bad news is the house is much more expensive than you thought. To avoid this scenario, home loan officers strongly advise getting pre-qualified before house hunting. The potential buyer presents their income and debt data to a lender, who also pulls a credit score. Based on the buyer’s financial information, they receive the loan amount they could qualify for. This figure will help new home shoppers search for houses in a certain price range, avoiding the heartbreak of falling in love with a property that’s over budget.
2. Surprised by Extra Expenses
Another common mistake for first-time home buyers is not knowing all that goes into a mortgage payment. Homeowners association fees, property taxes, and insurance are additional costs on top of the monthly home loan payment. Add in electric, gas, water, and garbage bills and the expenses quickly add up. New buyers should compare these estimated costs with their take-home pay. If the latter figure is less, they may have to save more, increase their wages, or search for a cheaper home.
3. Buying Big-Ticket Items
As you get closer to starting the search for that first home, new debt could be a problem. Avoid financing big-ticket items such as a new car or appliances. Lenders like to see applicants who are not overextended with their financial obligations. Most use the debt-to-income (DTI) ratio to ensure borrowers are not maxed out on debt. The ratio compares your monthly income before taxes to monthly bills. The lower the DTI, the better chance of getting approved for a home loan.
If you’re a first-time home buyer, being proactive is the key to preventing surprises. Aloha Mortgage, in Honolulu specializes in helping new buyers navigate the complicated process. From finding houses to financing and closing, you can count on the team of experienced home loan officers to be there every step of the way. It’s why Oahu residents continue to turn to the local agency for affordable and accessible loan options. Get started on your journey today by calling (808) 255-9366 to speak to a friendly specialist. Visit the website for more information on the agency’s listing of services, including refinancing and reverse mortgages.