Home buying itself can be stressful. On top of it all, home buyers must navigate mortgage rates and the ups and downs of the current housing market. It’s a lot to think about for anyone looking to buy a home, and especially first time home buyers. Anyone stepping into the housing market, and starting a home search, should do their research and understand their options to avoid common missteps, particularly when it comes to securing a mortgage.
A Realtor.com post from October 16th titled, “10 Things Most Homebuyers Get Wrong About Getting a Mortgage Today,” looks at common mistakes and provides insight to help home buyers navigate this process.
- Focusing too much on the interest rate.
Be sure you understand any fees that could go along with the rate you’ve secured.
- Assuming you need a 20% down payment.
You can put down less, but will need to factor in private mortgage insurance.
- Assuming you can get a loan instantly.
There are applications, phone calls, document collection to consider… It takes time.
- Thinking pre-qualification means you are approved for the loan.
Pre-approval is more valuable, as it shows the lender has looked at your finances.
- Not considering first-time homebuyer programs.
Explore these options, and how they help free up savings.
- Failing to check your credit score.
Knowing your score before speaking with a lender is key.
- Picking the wrong type of loan.
There are pros and cons to each, do some reading to get a basic understanding.
- Understanding fees beyond the down payment.
Yes there are other fees when buying a home, i.e. closing costs, title, transfer taxes, etc.
- Not preparing for the possibility of a low appraisal.
With high listing prices this is a reality. Another recent post covered ways to deal with a low appraisal; ultimately you’ll want to consider what you are comfortable paying when making an offer.
- Not shopping around for the right lender.
Reliability is key, especially in today’s market when getting a response from a lender so you can make an offer is top priority.
Bottomline if you want to avoid these common missteps that can trip up first time home buyers, or really anyone looking to buy a home in today’s market; understand your options, do your research and have a team of local professionals on your side.