Luke’s Picks
Buying your first home is exciting—and full of fine print. This guide highlights the most common mortgage mistakes we see with Atlanta-area first-time buyers and how to avoid them, in clear, no-jargon steps.
The Big 10 (and how to avoid them)
Skipping a true pre-approval (getting only a pre-qualification)
Lenders use “pre-qualification” for a quick estimate. A fully underwritten pre-approval verifies income, assets, and credit—making your offer stronger and reducing last-minute surprises.
Avoid it: Submit pay stubs/W-2s or 1099s, bank statements, photo ID, and permission for a hard credit pull. Ask for an automated underwriting approval (DU/LP findings) when available.Opening new credit or large purchases before closing
New debt can change your debt-to-income (DTI) and drop your score, affecting your rate or approval.
Avoid it: Freeze big purchases and new credit lines until after closing. If a change is unavoidable, talk to your lender first.Underestimating cash to close and post-closing reserves
Down payment ≠ closing costs. You’ll also see lender fees, title, taxes, insurance, prepaid interest, and escrows. Some loan types require reserves (1–2 months of payments) after closing.
Avoid it: Request a detailed loan estimate and a cash-to-close breakdown early. Add a 5–10% buffer to your estimate for safety.Chasing the lowest advertised rate without comparing APR & fees
A rock-bottom rate can come with discount points and higher fees. APR reflects the cost over time.
Avoid it: Compare APR, not just rate. Ask each lender for the same lock period, discount points, and credits to make apples-to-apples comparisons.Letting the rate lock expire
Delays in inspections, appraisal, or title can push you past your lock window, exposing you to market moves.
Avoid it: Know your lock start/end dates and any extension costs. Align contract deadlines with your lock period.Not understanding PMI (private mortgage insurance)
With <20% down on conventional loans, PMI protects the lender, not you. But it can phase out.
Avoid it: Ask about borrower-paid vs. lender-paid PMI, monthly vs. single-premium, and when you can request removal (typically at 80% LTV by request, 78% LTV automatic if on time).Overlooking total monthly payment (PITI + HOA + PMI + maintenance)
Focusing only on principal & interest ignores taxes, insurance, HOA dues, PMI, and maintenance.
Avoid it: Budget with the all-in number. Include a 1–2% of home price annual maintenance reserve.Making undocumented large deposits
Underwriters must source large deposits to ensure funds aren’t borrowed. Un-papered gifts or cash can delay approval.
Avoid it: Keep a paper trail. For gifts, use the lender’s gift letter and provide the donor’s proof of funds and transfer record.Choosing the wrong loan type or term for your horizon
ARMs, fixed-rate terms (15 vs. 30), FHA vs. conventional—each has trade-offs for payment, PMI/MIP, and equity build.
Avoid it: Match the loan to your 5–7 year plan. If you’ll move sooner, consider points carefully; the breakeven may not pencil.Not reading the Closing Disclosure (CD) line-by-line
Small numbers add up. Verifying lender credits, title fees, escrows, and per-diem interest can save hundreds.
Avoid it: Compare the Loan Estimate to the Closing Disclosure. Confirm wire instructions directly with the closing attorney/title office to avoid fraud.
First-Time Buyer Quick Checklist
- Get fully underwritten pre-approval (DU/LP if available).
- Price-shop at least 3 lenders on the same day with the same lock and points.
- Track cash to close + 1–2 months reserves.
- Set a calendar reminder for rate-lock expiration.
- Use all-in payment (PITI + HOA + PMI/MIP) for affordability.
- Document all large deposits; follow lender gift rules.
- Read the CD and confirm wiring via verified phone number.