Do you have a plan on making a home purchase soon? That’s great news! Being able to buy your own home is one achievement like no other. However, many people get intimidated with the idea of applying for a mortgage to get their dream house. But with the right information, you can make smart decisions and find a reasonable loan that can help finance your home.
Before you sign any contract and take precious money out of your pocket, make sure not to make the same mistakes commonly made by first-time homebuyers. Wondering what those are? Check them out below.
Assuming all lenders, mortgage brokers and home loans are the same
Not all types of lenders have the same qualifications, terms, and conditions for their borrowers. Not all mortgage types require the same the requirements required by FHA loans in Texas. And indeed not all mortgage brokers work with their client’s benefit in mind. It is the very reason why doing diligent research, asking for recommendations and shopping for home loans, mortgage brokers and lenders is an essential step in home buying.
Not checking your credits and finances first
There are first-time home buyers who get disappointed after knowing they are not qualified for a mortgage. The reason can vary – from credit report errors, their credit score being too low and having not enough money saved up in their bank accounts. Make sure your credit reports are free from error and that you do what it takes to boost your credit score and your savings.
Failing to understand your mortgage terms
Just because a lender offered what seems to be a good deal, you can just go ahead and sign on the contract. Some companies advertise low-interest fees, but in reality, they make up for high junk fees. Make sure to read, understand, ask for opinions and recommendations before you say sign anything. Working with a mortgage broker is a good idea as they can help you understand the different mortgages that fit your situation and find you the right lender.
Adding more debts on your tab
One common mistake first-time homebuyers make is that they apply for new and expensive loans before getting approved for a mortgage. For example, applying for a new credit card or a car loan. These are major purchases that can definitely make a dent on your credit. You may lose your chances of getting a home loan if your Debt-To-Income Ratio becomes too big.
A job-hopping history
Lenders will want to make sure you’re financially able to pay them the mortgage back, and one of the things they’ll be checking is your employment history. If your is sporadic and it seems you can’t stay employed for too long on a single job, this can hurt your chances of getting a home loan approval. Make sure you stay on the same employer and prove your job stability.
There is just a short and simple list, but they can definitely educate you on the common mistakes made when it comes to mortgages. Make sure to check on this list before applying for one, and to share this to your friends who plan on applying for a home loan.