Are you a first time home buyer? Although becoming a new homeowner is incredibly exciting, the entire process can be quite overwhelming. Sometimes people jump headfirst into home shopping before properly preparing their finances and conducting the proper amount of research.
We understand if you’re chomping at the bit to find your dream home, but failing to take proper precautions could cost you big time and even result in a foreclosure. Before shopping for your home, you need to focus on getting your finances in order and finding the best mortgage rate. Take a look at the common mistakes we see people make with new mortgages.
Not Shopping Around
One of the most unfortunate mistakes first time buyers make when shopping for loans is they only apply to one mortgage lender. If you were shopping for a car, would you buy the first car you looked at? Probably not, so why would you go with the first mortgage offered to you?
First-time buyers can feel intimidated by the actual mortgage transaction, but we urge you to push through this fear and shop around. By comparing different mortgage rates, you could save tens of thousands of dollars.
Our mortgage brokers at Scout Mortgage have built relationships with a variety of different financial institutions. We apply to as many different mortgage lenders as possible so we can help you find the best mortgage rate today. Our expertise could save you time and money.
Making a Small Down Payment
Ideally, you need to put down at least 20 percent of your home cost to obtain an excellent mortgage rate. If you don’t have that much money saved, you may have to buy mortgage insurance, which could tack on an extra hundred dollars or more in monthly payments.
Not Taking an Honest Look at Your Credit
Prior to obtaining a mortgage, you need to take an honest look at your credit. First, you need to obtain a credit report. In light of the recent Equifax hack, this is especially important. If there are any mistakes in your credit report, you must take actions to fix them. If you don’t, your credit score could suffer, making your mortgage rates higher.
Before shopping for a home, you need to understand what you can afford. Pre-approval is basically the lender’s determination of what you can afford for a mortgage. However, this is just an estimate, so take a good look at your finances to determine if this mortgage rate fits your lifestyle and budget.
When making a bid on a home, sellers are more inclined to choose a bid from someone who has already been pre-approved. The last thing you want is to fall in love with a home only to find out that it’s out of your price range or the seller didn’t select your bid. Take the time to get pre-approved beforehand.
Sometimes people lose sight of the fees associated with acquiring a mortgage. Some of the additional costs tied into mortgages include origination fees, discount points, third party costs and prepaid interest. You may also have to pay lender credits used to offset loan costs. Understand the fees you will be paying before settling on a loan.
Buying a Home You Can’t Afford
In addition to your mortgage payments, you have other monthly payments to make, including car payments, utilities, phone bills and more. Don’t forget that you are responsible for any repairs or maintenance costs associated with the home you own. Therefore, it’s imperative that you buy a home with mortgage payments consisting of 28 percent or less of your pretax income.
Our Scottsdale mortgage loan company is here to look out for you so you don’t make these common mistakes. By shopping around for you and comparing different rates, our mortgage advisors can make the entire process easier and much more understandable. Contact Scout Mortgage today to get started.