The idea of buying a home can be exciting for some but intimidating to most. This is especially true if you are a first-time homeowner. But, don’t let enormity scare you away. With the correct guidance and by knowing the right information, one can be confident that you can make smart home-buying decisions.
When it comes to homeowners planning to take in a mortgage, here are some costly mistakes you need to know and ways how you can avoid them.
Mistake #1 Waiting too long to improve credit scores and check credit report.
When it comes to home loans, your lender will ask for specific requirements to check if you’re qualified for a mortgage, and one of the things you’ll need is a good credit report and a high enough FICO score. If you already have plans to buy a house soon, make sure to check your credit report and regularly check for errors. As for your credit score, dins ways to improve it. The better your score and credit report is, the better rates and terms you can get.
Good read: How to Improve Your Credit Score
Mistake #2 Not shopping for mortgage lenders.
Not all mortgage lenders are created equal, which means it’s best not to settle with the first lender you come across with. Every lender offers different home loan programs, rates, and terms. Make sure to shop around till you find a reputable Mortgage Lender Midland who will not only provide the best deals but also understands your current situation.
Mistake #3 Not saving enough down payment.
According to research, many people find difficulty when it comes to saving for down payment no matter the income generation. Yes, it is true that there are home loan programs that offer little no down payment. However, since more mortgages typically ask for 3.5-20% down, putting less than 20% down means you need to pay mortgage insurance. It would be best if you do save a solid chunk of money as down payment to avoid extra fees on top of your mortgage payment.
Mistake #4 Leaving off essential details during the mortgage application.
Whether you do intentionally or not, omitting or leaving off details can sabotage your chance at getting approved for a home loan and your home purchase. For example, you did not tell your lender that you have deferred student loans, or maybe you did not list child support payments. Even if you do qualify and get approved for a home loan, you’re risking yourself of being house poor if you can no longer afford mortgage payments once all fees along with your current expenses kick in.
Mistake #5 Job-hopping before closing the mortgage.
One of the strict requirements of lenders when it comes to home loans is that you need to be financially stable. When you change jobs even before your mortgage deal closes, you’re risking yourself of getting denied a mortgage. Lenders will want to make sure you can afford the loan. If your Debt-To-Income Ratio and employment history can’t show 24 months worth of federal tax returns, you can expect your lender to deny your application, so it’s better to wait until after closing before changing jobs and employer.