Everyone dreams of owning their own home. But, most people cannot afford to buy a house. You may have to work for years but with time, mortgaging will your best road to homeownership. Though affordable, most people overlook the details and often, your real estate agent won’t tell you every little cost upon your first few meetings. To save you from costs that you did not mistakes, here are some mistakes you should be aware of and avoid:
Common Mortgage Mistakes
Ignoring your credit score
Your credit score determines how much your bank will be willing to give you and also the interest rates that the mortgage company will charge. If you have a low credit score and you insist on owning a home through a mortgage, you have to be ready for high-interest rates. If your score is genuinely low, you might want to work on improving your credit score before you get a mortgage.
But, what if the cost of your home is too high, not because of your debts and poor repayment but because of some errors? To enjoy lower interest rates, you need to check with the main credit bureaus to ensures that the details on your credit score are accurate.
Taking an offer from the first lender you set your eyes on
Although they promise you the best rates on the market, are you certain that their rates are the lowest one, that they don’t have hidden costs, and that the other lenders on the market don’t have even better rate?
The truth is that you have to shop around for some time to find the best lender, the same way you have to compare prices when buying furniture or a TV. So, besides the price indicated on the brochure, and the fact that you are told the house won’t be on the market for long, take your time and ask about closing costs, the total cost of the loan, interest rates – fixed or variable, and the cost of private insurance. Pose these questions to all the lenders you consider.
Not talking to your lawyer
Many people have had to lose property bought during separation and others are still dealing with these cases. Despite your immediate need for a home, you must always consult your divorce or separation lawyer before you buy property.
Failing to check the cost of a mortgage at half the percentage point
A 5.5% interest rate loan costs more than a 5% interest loan. The 0.5 difference may seem like a negligible difference, but you will be paying either loan for the same duration, but monthly payments for the 5.5% interest loan will be higher.
Changing your job before your loan is closed
Job hopping might mean a higher salary, but that might affect how much your bank gives you or the interest rate the lender charges you. Note that if you change jobs from employed and salaried to self-employed, your debt to income ratio increases and your loan may be reduced. Also, the loan approval process may grind to a halt when your employment status changes.
The last mistake you should avoid is omitting important information from your application.