While there’s a true sense of accomplishment that goes hand-in-hand with buying your first home, if you don’t know your way through all the hoops, loops and fires that obtaining a low interest home loan requires, you could very well find yourself in a financial pickle.
Lucky for you, rolling out recently had the opportunity to chop it up with one of Atlanta’s top-selling real estate consultants, Aaron Cotteral, to answer some of your most nerve-racking questions. Cotteral, whom you may recognize from his recent Valentine’s Day segment on “The Steve Harvey Show,” is a British implant and former pro athlete.
Most recently, the aspiring “Bachelor” and his business partner aligned themselves with The American Cancer Society and Children’s Healthcare of Atlanta to launch the Listing for Lives Campaign. The ambitious 90-day effort hopes to raise $10K for the charitable cause, a driving force in increasing awareness of childhood cancer and enhancing support for those fighting the disease as well as the clinicians and researchers who have made it a priority to care for them. Kicking off the imitative, Cotteral and his partner are donating a portion of their commission earnings to each organization.
During the campaign, each client they represent – buyer or seller – will be given the opportunity to decide which organization they would like their commission proceeds to be donated to. In the meantime, Cotteral has offered up five key things to keep in mind when buying your first home.
1. Do your research – “What you should research is the following: what kind of loan will work best for? A FHA, Conventional or VA loan? Another factor to consider is how interest rates are determined,” says Cotteral.
2. Be realistic when creating your budget – First you will need to assess your credit. Your credit score has the biggest impact on what you will get approved for and how much of a down payment will be required of you.
“What I’ve found in my experience is people often want more house than they can safely afford. So, it is vital that you understand your budget! First-time homebuyers tend to pick out a home before knowing the amount they qualify for and it’s best to understand how much you can afford before you start looking. I always suggest that my clients get prequalified by an established lender just to give you an idea of what your minimum and maximum budget may be,” he says.
3. Understand your monthly payment – Contrary to popular belief, paying your mortgage is not like paying rent – by a long shot. Cotteral says there are several principles to consider: “PITI 1- Principle (Mortgage) Interest (Applied from interest rate) Taxes (Divided annual taxes) Insurance (Homeowners insurance).”
Keep in mind, some affluent neighborhoods or those in the suburbs may tack on additional fees. “For example, if your community is gated and has swim, tennis and a clubhouse – you can expect to pay a pretty penny in HOA fees – whether it is monthly, annually or bi-annually – this is major expense to consider.”
4. Know your options – There are a handful of assistance programs geared specifically towards first-time home buyers. “FHA loans are a great option for first timers, due to the low down-payment rates. Two other programs, like the Georgia Dream Program and USDA program offer down payment assistance to secure a loan.”
5. Be patient! – Take the time to “find an agent with strong negotiation skills,” says Cotteral. Also, shop around for the best mortgage rates with peace in mind, that your credit score won’t take a major hit. “Home buyers can be misled into thinking that when shopping for the lowest interest rate with different lenders, it will negatively impact your credit score. This is myth! The credit bureaus understand that as a home buyer you will be shopping around to get the best rate possible from a number of lenders.”
While the process can be taxing and you may not initially get approved for the property your heart is set on, keep in mind that you are one step closer to your dream home. More importantly, Cotteral says, “while this may sound as if you’re accepting defeat, you’re not! You will eventually find yourself in the property that is meant for you.”
For more information on Aaron Cotteral’s services, visit www.AaronCotteral.com.