There are many things to consider when getting a mortgage. Unfortunately, many people who try to get a mortgage jump in to the process too soon and they make mistakes that could cost them hundreds or thousands of dollars. Here are three common mistakes that people make so you can prepare yourself to avoid them.
1. Not Knowing Your Credit Score
Before you even think about getting a mortgage, the first thing you should do is learn about your finances. This means knowing your credit score and your history as well as your ability to pay the mortgage each month and the other bills that go along with home ownership. Many people try to get a mortgage without knowing the credit score and they expect to get the lowest mortgage rates available. You should know your credit score before getting a mortgage because if it is too low, you can save money over the course of the mortgage by paying down some bills and bringing that score up so you can qualify for a better interest rate.
2. Looking for a Home before Approval
The excitement of buying a new home sometimes causes home buyers to search for a home before they even know how big of a loan they will get approved for. They find the home they want and then find a lender to find out how much they can get. But you should always get pre-approved by a lender before you purchase a home. When you do, you are in a better position to compete against other buyers when you find the home you want. You can close sooner and you won’t get your heart set on a home that you cannot afford.
3. Forgetting about Other Expenses
When you buy a home, you don’t just start paying your payments the month after moving in. You have to consider the down payment, closing costs, moving costs and other things that are going to cost money. Many home buyers forget about these extra fees and charges and sometimes they have to let the home go to another buyer because they don’t have enough left over for these extra costs. Talk to your lender about closing costs and other fees before getting to the final stage of buying your home so you can be prepared and be sure you have the money to close on the deal.
These are just three common mistakes that people make when they buy a home, especially their first home. We’ll explore this topic more in future postings to help you avoid these common problems.