A mortgage is one of the largest financial responsibilities you’ll acquire throughout your life, it requires a significant investment and time to negotiate properly. Therefore, you want to do your best to avoid making possible mistakes that could affect the process of achieving your dream of homeownership.
Tip #01: Check Your Credit!
Before you begin searching for a home, you should always check your credit first. You may have issues with your credit that you didn’t expect or forgot about.
Checking your credit early on will help you avoid surprises down the line. You may able to resolve some issues with your credit before you begin the process of applying for a mortgage loan. Did you know you can pull your credit for free from the three major credit agencies once a year?
Remember that your score can have an effect on the rate you can negotiate with your lender.
Tip #02: Avoid acquiring any new debt
A new debt can have a negative impact on the process of buying a home. This is a big mistake that should always be avoided
Applying for new credit while in the process of buying a home 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 as your lender will check your credit report before final approval. Any changes in your report could even affect your score enough to change your interest rate.
Lenders nowadays are very cautious about who they give loans to. They tend to be very thorough when evaluating a new borrower. Don’t underestimate the scrutiny you will be under throughout the process.
Tip #03: Consider your payments
Once you have purchased a home, you’ll have to acquire homeowners insurance, pay property taxes and any homeowner’s association fees applicable. Repairs and maintenance of the home may also be considered.
It will be of your benefit to carefully go over your personal income and expenses to best determine how to manage your payments. Make sure to include utilities, appliances, and furnishings.
Tip #04: Get Pre-Approved
A mortgage pre-approval is imperative as it gives you a guideline on what you can spend on a home and will reveal any potential issues that could prevent you from getting a home.
Note that being pre-qualified is not the same as being pre-approved.
Being pre-approved will give you a better opportunity to get your dream home if other buyers are making an offer at the same time and are not pre-approved
Tip #05: Shop your mortgage
It is recommended to shop around to try to find the most favorable terms possible with your mortgage loan. Just a fraction of a percent can make a difference on your mortgage loan interest.
Gather all of the information that you may need regarding your pre-approval, this will help you make this process easier. You can then forward this information to multiple mortgage lenders for a quote on their rates and terms.
While comparing mortgage programs you want to look at points, closing costs and other fees that can have a dramatic impact on the overall cost of your loan. A cheaper rate may not be the best deal if the rest of the costs are higher.