What First-Time Cumming Home Buyers Have to Know to Get a Mortgage
There is nothing more confusing and overwhelming than getting a mortgage for the first time. By the time most first-time Cumming home buyers start looking at mortgages they have already spent months or years debating over the perfect property.
But securing a mortgage is an important step in the house sale process. Which is why first-time Cumming home buyers should go in with as much knowledge as possible.
Too Much Loan
An occasion may arise when a Cumming home buyer finds themselves with the potential for a massive mortgage while their pocketbook cannot foot the bill. Even though a lender has crunched the numbers and offered a high amount on a mortgage, a home buyer does not need to use the full amount. Think less about the amount of money offered by the lender and focus on the monthly payments needed for the loan. Stretching finances too thin will make it difficult to dig out of an emergency situation.
Go to Multiple Lenders
Do not stop after applying for a mortgage at one lender. First-time Cumming home buyers often go to the bank they are currently using, apply for a mortgage and do not bother comparison shopping. This can cost them a lot of money if there are other lenders offering lower interest rates and better terms. It is a lot more work but it is worth it to save thousands of dollars in the long run.
Interest Rates
Interest rates are something that a buyer needs to pay attention to and hopefully keep as low as possible. There are many factors that go into interest rates decreasing or increasing. A buyer should work on reducing their overall debt before applying for a mortgage. This helps to reduce their debt to income ratio.
Having a larger down payment can significantly help, as well. Even if first-time home buyers do not have enough money by themselves they should consider using gift money. Gift money can be used for down payments over twenty percent if given by an immediate family member. This can be a great way for young Cumming home buyers to get a leg up on the competition.
Points
Buying points is something Cumming buyers who intend on staying in their home long term can consider. Buying points is a way for lenders to have buyers pay their interest upfront instead of over the course of the loan. A lender may offer a buyer a few thousand in buyer points to reduce their interest rate. If the buyer stays in the Cumming home for many years they may save money on the reduced interest rate.
However, a buyer who moves out of the home right away and sells it may be throwing money away on buyer points. They should see at what point their interest rate would reach the amount paid for buyer points and determine if they will stay in the home to that point. If they will not break even than it is not worth paying to reduce the interest rate.
Locking In a Rate
A savvy buyer will wait to lock in their interest rate until it is at its lowest point and at the right time to be able to close on a sale. An interest rate lock will only last for a certain amount of time – usually a few months. If a buyer is unable to close on a sale in that time their rate will expire and could fluctuate up or down depending on what the market is doing.
Finding the best mortgage lender is something that takes time. First-time Cumming home buyers need to research their lenders, find their rates and understand the terms of each loan. They can explore options like buying points or locking in an interest rate to help get the best deal possible.
Overall, it is a labor intensive process. But in the end, it is worth it to get a new home with a mortgage.