Shopping and Buying

Use the information provided below to help as you buy your first home.

Get Pre-qualified

Getting pre-qualified for a mortgage loan shows you where you stand
financially. A pre-qualification is based on your current income, debt and
savings. Pre-qualifying is used to estimate the monthly house payment you can
afford; it does not guarantee you a loan. Getting pre-qualified is an extremely
useful and important step to take as you begin the mortgage process.

If you’d like to get pre-qualified now, visit our online Pre-qualification
tool. There’s no obligation, and it’s safe and secure.

Choosing a Mortgage

There are many different types of loan programs available, and these fall
into one of two categories of loan: fixed-rate and adjustable-rate.

Fixed-Rate Mortgages: A standard fixed-rate loan has a fixed interest
rate, a fixed monthly payment and is fully amortizing–that is, you pay off the
loan completely–over a given number of years (for example, 15 or 30 years). A
portion of each monthly payment covers the interest on the loan. Another portion
reduces the principal balance. Regular payments systematically whittle down the
amount you owe until the loan is paid in full.

Adjustable-Rate Mortgages: Adjustable rate mortgages (ARMs) have
interest rates that go up or down with the economy, which could change your
payment amounts from year to year. ARMs help lenders cover the cost of lending
money in a changing economy by transferring a portion of the interest rate risk
to you. In exchange for sharing the risk, you’re offered an initial interest
rate that’s often substantially lower than the interest on fixed-rate loans.

For an informative preview of the most common types of loans available from
Freedom Mortgage, view our Finding the Right Mortgage comparison chart.

Avoiding Common Mistakes

First-time homebuyers are both inexperienced and eager to get going, and
sometimes that combination creates mistakes. To help avoid the most common
mistakes, read through the list below.

  • Buying too fast. While it’s understandable that buying your first
    house is exciting, be patient. If you enter into a contract on a house that
    seems wrong for you, in most cases you’re stuck with it. Know what you want
    and try to find the closest thing.
  • Buying too much house. If you buy a house that’s more than you need
    or can afford, you’ll find it difficult to afford furnishings, home
    improvements and the inevitable emergency repairs. Buying above your means
    also creates unnecessary stress within the family.
  • Choosing a mortgage without comparison shopping. There are
    countless types of mortgages available today, and it is well worth your time
    to figure out which type of mortgage will best suit your finances.
  • Unwilling to compromise. Almost no homeowners find a house with
    100% of the things they want. It’s OK to compromise—especially on the small
    things that can be changed later on. Make a list of the things you won’t give
    up and accept some compromise on the rest.
  • Skimping on the inspection. You can never predict when a real,
    professional inspection might end up saving you thousands of dollars and years
    of homeowning headaches. Why take the chance?

How Much House Can You Afford?

Before you look at a single house, be clear in your own mind about what type
of house you want, and in where you want the house to be. It will save you the
endless visits to the “wrong” houses, and could even prevent you from realizing
too late that you bought the wrong house.

Create a list of the most important things you’re looking for in a house. Do
you like to fix your car on weekends? Make sure you look only at houses with a
garage. Do you often host dinner parties? Make the quality of kitchen and size
of the dining room a priority. Do you have children who’ll be attending public
school? Investigate the neighborhoods with the best schools.

Only you know what’s important in your life. Keep those requirements in mind
as you shop for a house so you can buy a home that will serve your needs for
years to come.

Smart Negotiating

There’s one key quality that will make you a better negotiator: preparation.
Once you decide that you’d like to make an offer on a house, you should know as
much as you can about the neighborhood and the house itself.

Real estate agents have access to a listing called the Comparable Market
Analyses (CMA). CMAs show the recent selling prices of properties similar to the
one in which you’re interested. This information is priceless to the purchaser
during the negotiating process. Please note: If you don’t work with a real
estate agent to find a house, you may not have access to a CMA.

If at all possible, try to find out what’s motivating the sellers to sell.
The reason may help you decide if you should negotiate aggressively.

Finally, be realistic. You may create unnecessary tension or even rejection
if your first offer is too low and unrealistic. You may lose your chance to
negotiate altogether.

The Closing

Closing is the final step in the home buying process. At the closing, you’ll
settle all the financial details associated with the purchase and receive the
title to your new home. There’s not a standard closing process that’s followed
in all areas of the country. Most closings are conducted by a closing officer of
a title company. The closing officer makes sure all necessary documents are
signed and verified and that the money from the sale is properly distributed.

After you’ve signed all the necessary documents and paid your closing costs
and down payment, the closing is finished and you can start enjoying the
benefits of homeownership. Congratulations!

Tips For First-time Homebuyers Main