First-Time Homebuyer Errors: Programs, Savings, Points

In part one of this multi-part blog series, we went over some of the common errors first-time homebuyers often make as they enter the market. Many of these are based on simple misunderstandings or myths that have arisen over time, but there are also some simple resources that will allow you to avoid these risks.

At Altius Mortgage and our partners with Mortgage Ogden, our quality loan officers are here to serve as one of these resources, assisting clients with numerous loan programs ideal for first-time buyers and providing several other areas of expertise. What are some of the other common issues we see our first-time buyer clients get wrapped up in, and how can you avoid these?

Missing Out on First-Timer Programs

As we just noted above, and as all first-time buyers should be aware, there are several programs out there that are either specifically designed for you or are often used for buyers in your position. These allow for themes like lower down payments, moderate interest rates or other benefits – but as a buyer, you have to do your research and determine which of these might be beneficial to you, something your loan officer will help you with.

Here are some of the specialty loan programs you might be eligible for:

• FHA loans: These loans, backed by the Federal Housing Administration, allow for down payments as low as just 3.5% of the purchase price. In addition, they also have lower credit thresholds than other loan types, allowing you to qualify even if you might not have for a conventional loan.
• VA loans: These loans are guaranteed by the US Department of Veteran’s Affairs, and are for military members, veterans and certain spouses. They allow for no down payment and 100% financing.
• USDA loans: Meant for homes in rural areas, these loans are backed by the US Department of Agriculture and also allow for zero down and 100% financing.

Running Savings Dry

While you might use a sizable chunk of your savings for a down payment and closing costs on your home, it’s important not to sap them completely. It’s vital to leave funds available for unexpected repairs or costs once you move into the home, plus things like moving expenses. This is another area where our loan officers will be happy to provide basic advice.

Misunderstanding Discount Points

For some, the use of discount points – fees you pay up-front to reduce your interest rate down the line – might be valuable. Whether you go for discount points will depend on the break-even period, or how long it takes for this up-front cost to be exceeded by the monthly savings you’ll receive from a lower interest rate. In reality, only a small percentage of buyers will truly benefit from discount points, and you should inquire specifically with your loan officer about their benefits before considering them.

For more on how to avoid common first-time homebuyer errors, or to learn about any of our home loans or mortgage rates, speak to the staff at Altius Mortgage today.