TOP 10 MORTGAGE MISTAKES TO AVOID
A mortgage will likely be one of the biggest financial responsibilities you’ll acquire throughout your life. Despite this, there are still some big mortgage mistakes some people make every day, especially first time home buyers. If you are thinking of purchasing a home you should try and avoid these pitfalls.
CHECK YOUR CREDIT
Before you start your home search you should check your credit. Sometimes something may pop up on your credit that you didn’t expect, such as late payments on accounts you forgot about. If you check your credit early on you can avoid nasty surprises down the line. Some issues can be resolved before you start applying for your mortgage loan. You can pull your credit for free from some credit agencies once a year or the lender you are working with can do this for you.
DON’T APPLY FOR ANY NEW CREDIT
Taking on new large purchases such as vehicles can have a dramatic effect on your debt load and your credit score. If you make a major purchase your mortgage loan could fall through in the final stages. Many prospective homeowners believe that their loan has been guaranteed once they have been pre-approved, but that is not the case. Any new debt will affect the debt load and credit score.
UNDERESTIMATING YOUR HOUSING PAYMENT
Your housing payment doesn’t just consist of your mortgage payment. It will also include homeowners insurance, property taxes, monthly utilities and repairs and maintenance. Remember you don’t ever want to be “house poor”.
DON’T MAKE ANY LARGE DEPOSITS
Any recent large deposits will be scrutinized. Mortgage lenders want to be assured that all the money you put towards your home came from you (there are sometimes some small exceptions to this). Remember lenders are going to scrutinize everything with regards to your banking during the loan process.
STAY IN YOUR CURRENT JOB
Changing positions in the middle of getting a mortgage loan is usually not a good idea. If you change jobs that can complicate the entire process. Changing jobs with a new employer is one of the biggest mortgage mistakes when trying to buy a home.
ALWAYS GET A PRE-APPROVAL
A mortgage pre-approval is key because it gives you a guideline on what you can spend and will reveal any potential issues you may have (credit etc) that could prevent you from getting a home. But remember pre-qualification letters are not the same as a pre-approval. A pre-qualification doesn’t look at all the aspects, it is much more general. Not getting a pre-approval could cost you delays when making an offer.
SHOP YOUR MORTGAGE
Some buyers are surprised the difference a percent can make on their mortgage interest. You should always shop around and find out from different lenders what they can offer you. Just make sure when you are comparing mortgage programs that you are comparing apples to apples. While one lender may have a cheaper rate, the different closing costs could make it not such a great deal.
KEEP YOUR MORTGAGE SIMPLE
Usually sticking to something simple is your vest bet. Try to avoid packages that come with complications or catches.
The bottom line is be knowledgeable. Make sure you are comfortable with your mortgage payment, the additional expenses (insurance, utilities, taxes etc), know the details of your credit and when it comes time to choosing a mortgage, read your documents and know the details. A good mortgage lender with adequately discuss and explain things to you. Remember to ask questions! Happy house hunting.