There are a lot of slippery paving stones on the path to owning your own home. Knowing the path you want to take and watching your step to avoid mortgage mistakes will lead you, in the happy end, to your own front door.
There are myriad mortgage mistakes to be made when buying a home, but they are avoidable. Here, I’m going to go over a few of the most common mortgage mistakes and describe ways to avoid them.
Choosing the first thing you see.
It’s tempting to jump on the first option you see when buying a home. The first choice you’re presented might not be the best choice for you. Historically mortgage options were limited. Now there are many options, all with different costs and risks.
Waiting for rates to go down.
Don’t wait for mortgage rates to hit the bottom. You never know what the bottom was until it’s too late. Hindsight 20/20 and all. Right now fixed rates are still at a historic low – low enough it’s possible you will never need to refinance.
Ignoring your credit.
Don’t wait to check your credit! Check your credit report before your start house hunting. Make sure there are no bad surprises waiting for you before you begin the mortgage process. Errors happen everywhere in life, including your credit report. Learning about errors and dealing with them early with save you potential heartache later. AnnualCreditReport.com is the only Federal Government Approved place to check your credit report for free. You’ll have to pay for your actual score, but it’s valuable information and worth the mere couple of dollars.
Not getting pre-approval
One avoidable mortgage mistake is failing to apply for pre-approval for a loan. Pre-approval requires filling out an official mortgage application. There will be a fee to do so, but you’d be paying it anyway. Might as well do it early and reap the benefits now. Get pre-approved before you start looking for a home. Along with giving you an idea of what sort of interest rate you’ll be able to get, it lets you know your price range so you can better target your house hunt. Pre-approval also lends you credibility over other potential home buyers and gives you negotiating strength.
Pre-approval and pre-qualification are not the same thing. They are both good to have, but pre-qualification will not take you as far. Here’s some quick information about prequalification. It’s good to have if you’re just wanting some quick and rough numbers for a very basic budget discussion. It’s a good first step to seeing an overall financial picture.It’s quick and simple, but any information is not a sure thing.
Not understanding your responsibility.
One huge mortgage mistake to make is not fully understanding your responsibilities. Shop around. Know all the fees associated with a loan. Create a budget. Remember to consider future fees, taxes, insurance. Remember you’ll want to furnish your new home.
This is not an exhaustive list, but it’s certainly a good start. Ask your trusty lending officer for advice. Remember there are different types of loans and look into them to see if non-traditional might fit your situation.