We’ve all seen the commercial for the dish where a man gets so frustrated with cable that his anger gets the better of him. One thing leads to another, and through a series of mistakes he winds up in a roadside ditch!
Unfortunately, we’ve seen people trying to buy a home have a similar experience. Maybe they don’t have an eye patch at closing, but they do have serious frustration along the way that could be avoided with a bit of planning and guidance.
As mortgage professionals, we’d like to help you avoid making the same mistakes that we often see being made over and over again. With that in mind, we’d like to offer this list of common mistakes we’ve observed people make during the process of buying a home:
1. Assume your credit is good enough
This mistake starts when people start shopping for a new home and settle on the right one they’ve always dreamed of. But wait; your lender is asking about a loan you co-signed on 5 years ago that is now in default that you forgot about!
Don’t make the mistake of assuming your credit is good enough to buy a home. Problems such as late payments, maxed out credit cards, deferred or delinquent student loans and other credit issues can keep you from getting the loan you need to buy the home you want.
Start by having a lender pull your credit and ask them to review it with you as you move to Mistake #2 on our list.
2. Go house shopping before you are pre-approved
Just as with the credit issue mentioned above, you don’t want to find out that you can’t actually afford the house you just put an offer on AFTER the fact! Many people fail to understand how lenders calculate how much of a loan you can qualify for by taking into account your verifiable income and the structure of your current debt. These calculations are different for almost every situation which is a good reason to let an experienced mortgage professional pre-qualify you before you start.
3. Pass on a Home Inspection
Once you decide on a house, it’s always a good idea to get a home inspection done by a qualified local inspector. They will closely evaluate the many details of a home to ensure it’s in good condition, and if not, they will give you a list of the home’s shortcomings. Sometimes these inspections can turn up more than just leaky faucets – things like termite damage or air conditioner system problems are just a few of the potentially costly home issues inspectors often catch.
4. Don’t read your disclosures
Few things make people angrier than getting a larger bill than they are expecting, whether it’s at the auto repair shop or your favorite restaurant. Make sure this doesn’t happen to you when you show up to sign for your loan and get sticker shock at the costs associated with the transaction.
By law, lenders are required to provide you with a Good Faith Estimate which outlines these costs. Make sure to review this document carefully when you first receive it, and ask as many questions as necessary for you to feel comfortable.
5. Use all your money to buy they home
Once you get the keys and actually move in, you will quickly realize that your mortgage payment isn’t the only cost associated with owning a home. People who take pride in ownership invest in landscaping, new furniture and many other home improvements in addition to covering the cost for unexpected repairs as they occur. Make sure that you’re looking at the whole picture when you are trying to figure out what you can afford.
Not sure where to start – we can help!
If you are not quite sure where to start planning and want to make sure that you cover all of the tips covered here, just contact us today and come in for a free pre-qualification. Our helpful mortgage professionals will help take you through each step and make sure you fully understand your options when it comes to buying a new home or refinancing an existing home.