Home sales in Chattanooga are predicted to increase by 2% in 2020 despite projections that sales will drop 1.8% nationally. If you’ve never purchased a home, 2020 might be the year you decide to make the biggest investment of your life.
Buying your first home can be both an exciting and daunting experience. There are many steps to take to ensure the transaction goes smoothly. First-time homebuyers sometimes make a few missteps, such as not checking credit scores or talking to only one mortgage lender. Below is a brief guide to helping you avoid mistakes while buying your first home.
Check your score
Lining up your finances is key before moving forward to purchase your home. One of the first steps is checking your credit report and learning your credit score. Your credit score is an important factor a lender uses in determining your interest rate on your mortgage loan.
You have the right to a free copy of your credit report once a year from each of the three major credit reporting companies (annualcreditreport.com.) Check for and correct any errors on your credit report to avoid potentially paying a higher interest rate on your loan.
Know your price range
Attending open houses or touring homes can be overwhelming if you don’t know how much you can afford. You’ll risk falling in love with a dream home you might not be able to attain.
Before browsing the internet or driving around in your favorite neighborhood to find a home that works for you, talk with a mortgage lender. A lender will help you determine what type of mortgage you qualify for and your interest rate.
Talk with several mortgage lenders
First-time homebuyers that avoid comparing several different lenders could miss out on potential savings. When determining which mortgage lender is right for you, compare the different rates, lender fees and loan terms.
Shopping around will help you figure out the lowest rate possible. According to a recent NerdWallet report, assuming a 30-year, fixed-rate $260,000 mortgage, a buyer could save $430 in interest in the first year alone by comparing five lenders before applying.
Consider all your down payment options
The longstanding first-time homebuyer myth is that you need a 20% down payment to purchase a home. There are several loan programs and options available to allow buyers to move forward with putting down a smaller down payment. Determining how much you should put down is a personal decision based on your financial status.
Ready to find your first home? To connect with a mortgage lender, Realtor or new homebuilder, visit the Home Builders Association of Greater Chattanooga online membership directory at HBAGC.net.