Buying a home is one of the biggest financial decisions most make in their lifetime. That’s why it’s so important to approach this process with as much knowledge ahead of time to save yourself money and headaches down the line. Here are five mistakes you can easily avoid during the home buying process.
- Finding your home before you find your mortgage: If you don’t have your financing buttoned up before you find your dream home, your desire to win the bid could influence you to offer a higher price and overpay on a mortgage because you had no time to shop around. Start talking to lenders at least three months — maybe even a year — before you start house hunting.
- Not comparing loans correctly: First-time buyers often get seduced by a low-interest rate and don’t take into account the cost of fees. A lower-interest loan could actually cost you more than one with a higher rate because those fees can be steep enough to outweigh the interest savings. Make sure to compare loans by the annual percentage rate, or APR, not just by the interest rate.
- Falling for marketing gimmicks: Lenders use advertising hooks like, “We pay your mortgage insurance,” or “You don’t pay the closing costs.’ Don’t be fooled, you still pay those costs. If you’re not paying cash, you’re paying it in the interest rates. Make sure to block out the noise and shop for your mortgage based on trusted recommendations and reliable reviews.
- Not budgeting for your daily spending: Lenders qualify you for what you can technically afford on a spreadsheet. They’re looking at your monthly debt-to-income ratio. They don’t look at what you spend your disposable income on your passions and hobbies. So track your spending monthly so you have a better idea of how much you spend.
- Not knowing how to eyeball the paperwork: Mortgage rules require lenders to send you paperwork that actually makes sense. This new paperwork comes in two different documents. It’s much easier to scan and understand than the old paperwork. Make sure to review it yourself and speak up if you see something out of place.
If you have any questions regarding rates, mortgages, or the housing market in general, please feel free to reach out to our team at your convenience. We are happy to assist you with all of your real estate related needs.