Here at Mortgage Specialists, we love the educational aspect of our jobs. We love being able to educate clients, especially first-time home buyers, on all the ins and outs of the mortgage process. We teach them what to look for and common home buying mistakes to avoid.
While there are many mistakes to avoid in the home buying process, we’ve decided to only share our top four.
Waiting until the last minute to get pre-approved.
We’ve found that many buyers look for homes to buy first and only talk to a lender once they’ve found what they’re looking for. That’s backward in our opinion.[bctt tweet=”Looking to buy a house? Find a lender first, then look at houses.” username=”MTGSpecialists”]
Waiting until the last minute to get pre-approved means you won’t have much time to gather the documents needed such as your bank statements, W-2s, and federal tax returns.
It also means there won’t be much time to fix mistakes on your credit report (they’re more common than you’d think). If there are errors, it could mean a higher interest rate on your loan or, if you try to fix them, it could mean losing the house altogether if the mistakes aren’t corrected quickly enough.
In addition to all that, looking for houses before speaking to a lender means you don’t know how much house you can afford. We’d hate to see anyone fall in love with a home they can’t afford.
Assuming you’ll get everything on your wish list.
All of the items on your wish list may not exist in a home in your price range. Or maybe they could exist in that price range, but the right home isn’t on the market. Many realtors we’ve worked with over the years prefer their clients to make a need and want list. That way, their wish list is sectioned by priority.
Neglecting to shop around for lenders.
Like any other major purchase, it’s important to shop around before deciding to buy. We recommend talking to, at minimum, two different lenders. Once you’re pre-approved by both, you can decide on who to go with based on the loan terms they’ve provided.
However, the price isn’t all you should look at. Take into consideration the lender’s ability to communicate. Do your emails go unanswered for days? They might not be the best option for a seamless mortgage process. And don’t forget to check out their online reviews and consider what their past clients have to say.
Not understanding the full cost of homeownership.
We get it – if you haven’t owned a home before, you’re used to the costs of being a renter like rent, utilities, and internet. When you own a home, you’ll have all of those costs (well, a mortgage payment instead of rent), plus you must be prepared to pay for unexpected repairs. Financial experts recommend saving 1-3% of the purchase price of your home to use for repairs each year.[bctt tweet=”Financial experts recommend saving 1-3% of the purchase price of your home to use for repairs each year.” username=”MTGSpecialists”]
In addition to the added monthly costs, you must be prepared for all of the costs of purchasing your home. These costs include the down payment, closing costs, appraisal, and more.
We hope this post can help at least one person avoid these common home buying mistakes. If you’re thinking about buying a home in the near future, we’d love to meet with you. Begin the pre-approval process online or give us a call at 402-991-5153.