The process of getting a home mortgage can be a daunting experience. You are thinking about taking out the biggest loan in your life. This will probably put a personal strain on you. You also have to get the paperwork ready in order to complete the process. In order to get through this process successfully, look out for common mistakes home buyers make.
1.) Ignoring your credit score. Most prospective home owners leave getting approved for a mortgage up to luck. Well, you can take control of your luck by understanding your credit score. Request a copy of your credit report at least several months before you consider buying a home. This will give you enough time to dispute any mistakes on the report, and fix any legitimate errors (like paying off a utility bill that you didn’t when you moved out of your last apartment).
3.) Ignoring the possibility of state run grant programs. There are several governmental programs available for home buyers. These programs are in place to help first-time home buyers, sometimes with limited income, with expenses related to closing and down-payment costs.
3.) Not getting a pre-approval from a lender. Most home buyers will confuse a pre-approval with a pre-qualification. When you are pre-approved for a loan, this means you have already gone through the process of applying and have filed all of the accurate paperwork and have been approved. This means you already have a loan lined up for the purchase of a house. On the other hand, a pre-qualification is only a prediction a lender makes on how much you may be approved for based on your credit to income levels.
4.) Buying beyond your financial means. Even if a lender offers you much more than you can afford, it doesn’t mean you have to take it. Make sure you have sifted through your finances, and have figured out what you can afford and what you can’t. Surprises are always popping up as a home owner, and when you stretch your budget almost near breaking point, you will not have enough money to cover these surprises. Make sure you can comfortably make the mortgage payments.
5.) Not shopping for the best rates. Make sure you know what kind of interest rates you qualify for based on your credit score. Shop more than one lender. If you avoid shopping around you may end up paying much more on your overall mortgage.
6.) Paying too much for non-essential fees. Many lenders will tag on fees whenever possible. Make sure you go over the fees your lender is charging you. Make sure they are fair, and that you are not getting charged for non-essential services.
7.) Being unprepared for closing costs. Many times closing costs are a hidden expense that first-time home buyers may overlook. This is a particular amount of money you have to pay when you actually close the deal on the home. You will be responsible for lawyer’s fees, taxes, title insurance among others. Make sure you are prepared for this major expense.
8.) Spending all of your money on the buying the house. Usually, people scrape up all they can in order to obtain the home mortgage, find the house and move in that nothing is left over. As a home owner, you must always have some money put aside for unexpected surprises. These surprises may include plumbing issues, a damaged water heater, etc. You are your own landlord, responsible for taking care of these issues.