I Want To Be a Millionaire! It is not a secret that real estate has…
If you are a first-time homebuyer, LISTEN UP! 719 Lending is here to keep you from falling victim to the Top 4 First-time Homebuyer Mistakes. This short article and the above video are a life-line for you.
Mistake #1- Thinking you need more than a 3% down payment
Many people believe that a 10% – 20% down payment is needed to purchase a home. This just isn’t the case. There are loan programs that allow borrowers to purchase a home for as little as 3% – 3.5% down where all of those funds are gifted by a family member.
Mistake #2- Purchasing your “dream home” as your first home
As a first-time homebuyer, purchasing a “dream” or “forever” home may not be realistic. It’s more expensive and harder to qualify for this type of home. There is a great path to wealth that starts with buying a starter home. Live in it for a few years while saving money for the down payment on the next home. You may also be able to do a cash-out refinance on your current home to obtain the 5% down payment your need for a new home. Then rent the starter home and then move up to the “dream” or “forever” home. Check out this video for more details on this strategy.
Mistake #3- Buying a new car before buying a home
Buying a new car or living with high credit card payments before applying for a mortgage is another mistake prospective borrowers often make. One of the main factors in obtaining a mortgage is a borrower’s debt-to-income ratio. This is a calculation of how much money is coming in each month as opposed to how much money is going out. If the debt-to-income ratio is too high, the loan will likely be denied. If you are itching to buy a new car it is best to wait until after the mortgage is obtained!
Mistake #4- Not paying attention to your credit score
Credit history is a factor in credit health. Creditors want to see that a borrower can pay bills on time. If you are considering obtaining a mortgage, be sure to pay the bills when they are due each and every month. Credit cards and installment debts are listed on each credit report along with a payment history. If there is a good payment history the credit score will likely be higher than if payments are made 30, 60 or 90 days late.
The bottom line is this: You don’t need a ton of money to purchase your first home, but you may have to wait to obtain your “dream” home for just a few years. (Rome wasn’t built in a day!) Save your money and pay your bills on time. Don’t over-spend by racking up credit card debt or buying a new car. Your dreams can become reality with a little self-discipline and patience.