Buying a home is one of the most important decisions you will ever make, and home buyers want to be sure they are avoiding any common mistakes that can come up. If you’re thinking about getting a mortgage for your home, it’s important to know these pitfalls so you can avoid them and buy your home without the hassle or costly mistakes.
This guide outlines the most common ones.
MISTAKE 1: Not getting pre-approved before looking at houses
Thinking about buying a house but have not yet worked with any real estate agents or looked at homes? You need to get pre-approved by your lender before you start house hunting so you will know exactly how much you can afford.
Lenders will need to see proof of income, assets and debt to make a pre-approval decision for most people who apply for a mortgage. In order to work with an agent or start house hunting without getting pre-approved, it means that the lending institution is unable to provide proof of homeownership affordability, which can affect your ability to negotiate on price with a seller.
In addition, you might even need a larger down payment than you had anticipated if the lender guidelines state so when you sit down with them after receiving a pre-approval letter from them.
MISTAKE 2: Not realizing how much money you actually have
Before going through home loan applications and thinking about when the best time to buy is, it’s extremely important for you to make sure you know exactly your financial situation.
Here are some questions to ask yourself:
- How much money do I really have saved up?
- How much in debt am I in — credit card bills, medical bills, student loans, off any debt?
- How much am I paying monthly?
It’s important to be honest with yourself and get this information out before you go through the process of buying a home. Lenders will need to know the answers to these questions so they can help you find a path that is right for your financial
MISTAKE 3: Not getting any help or advice
Don’t be afraid to seek help and advice along the way if you are feeling overwhelmed by all of it! The more knowledge about purchasing a home that you possess, the better off you will be; but even with your best efforts, there’s always room for error.
When applying for a mortgage loan, you will have access to reliable mortgage lenders and experts who can help guide you through every step of the process so things go as smoothly as possible for you once work begins on your new home. If at first glance something looks wrong or you have any doubt, don’t be afraid to ask a question.
MISTAKE 4: Not telling the truth on your application
The truth is mandatory when it comes to giving information on a home loan application, so if you are caught lying about anything from employment history or credit score to income or anything else that pertains to your ability to repay this loan, you will immediately get rejected and lose all of your earned interest in the process. It’s best just not to even think about doing it.
MISTAKE 5: Applying for more than you can afford
Just because you make a certain amount doesn’t mean you should try and borrow more.
It’s before applying for a mortgage for the first time that you need to do the math. How much of your income will have to go toward paying taxes, childcare, or other expenses? This number should be subtracted from what you are able to spend monthly on housing costs so you can see exactly how much more you can afford for a down payment and monthly mortgage payments after all is said and done.
MISTAKE 6: Buying a house (you don’t like) just because it’s cheap
Believe it or not, there is such thing as too good of a deal when buying a house. Sure, everyone wants to pay as little as possible for their future home; but if the place could potentially require extensive repairs in order for them not to collapse (which is especially common with older homes), it’s not worth the cheaper price tag. There are too many other necessary monthly expenses surrounding your home that you need to consider here; if you get stuck with more added on top of that, you could be in for a lot more trouble than just buying a place that is slightly more expensive and doesn’t require any repairs.
MISTAKE 7: Not checking out everything before applying
It can’t be said enough how important it is to check out every single detail about the house you are thinking about purchasing. You don’t want to move into something without knowing exactly what has been done or needs to be done when dealing with electrical, plumbing, or roofing issues.
The cost of applying for a mortgage is high, so it’s important to do everything right the first time around. Look over this list of errors that people often make and keep them in mind before applying for a home loan.