When searching for a mortgage, it can take time to find the right one, but it’s worth the effort. Before you start, it’s essential to be aware of the most common mistakes people make when mortgage shopping.
The first mistake to avoid is overestimating how much you can afford. Before starting your search, you should determine how much home you can realistically afford. Many borrowers make the mistake of underestimating their monthly bills by not accounting for taxes, homeowners’ and mortgage insurance, and HOA fees. A mortgage calculator can help you set a realistic budget.
The second mistake is ignoring your credit score. Your credit score plays a significant role in the mortgage rate you’ll receive. If you have a lower score, take some time to increase it before applying for a mortgage. A higher score will save you time and money in the long run.
Third, don’t shop without a purpose. Stick to a 14-day shopping window to prevent a lower rate than you were hoping for. It’s also worth noting that a hard inquiry may temporarily deduct a few points off your credit score, but it will lessen over time.
Fourth, avoid opening new credit or making large purchases during the mortgage process. Your lender is watching your finances closely, so doing so could jeopardize your chances of getting a good rate.
Fifth, don’t choose the first lender you find. Take time to research potential lenders and learn about their loan products, rates, and service.
Sixth, don’t skip the pre-approval process. This step verifies that you’re financially qualified to purchase a home and lets you know what size loan you can afford. Getting pre-approved can make finding potential properties much easier.
Seventh, don’t forget about other homeownership costs. Homeownership comes with a variety of expenses, including electricity, water, energy, repairs, maintenance, and upkeep.
Eighth, don’t ignore the APR. While mortgage rates give you an idea of cost, the APR is the true point of comparison as it includes all fees and expenses that go into the loan.
Ninth, don’t scrimp on the down payment. With a small down payment, you’ll have to get private mortgage insurance and pay more on interest over the life of the loan.
Finally, don’t forget to check for prepayment penalties. Paying off your loan early can incur an additional fee, so make sure to review the loan terms and fees carefully.
By avoiding these mortgage shopping mistakes, you can safely navigate the home buying process and get the loan that meets your budget.
Don’t hesitate to make an appointment with your lender and discuss these possibilities. Alternatively, Oxygen Mortgage is poised to help you navigate questions and become your go-to source. We offer advice and direct help for real estate agents, buyers and sellers. Contact us at info@oxygenmortgage.net or check us out on Facebook.
