4) Biggest Mistakes Home buyers Make and How to Avoid Them

Discover the 6 Biggest Mistakes Home buyers Make and How to Avoid Them

Mortgage Regulations Have Changed...

Mortgage regulations have changed significantly over the last few years, making your options wider than ever. Subtle changes in how you approach mortgage shopping and even the small differences in how you structure your mortgage can literally cost or save you thousands of dollars and years of expense.

Get the Right Information

Whether you are about to buy your first home or planning to move to your next home, you must inform yourself about the factors involved. Industry research has revealed six common mistakes that most homebuyers make when mortgage shopping, which can significantly impact the outcome of this critical negotiation. If handled correctly, these issues could result in a mortgage that will cost you less over a shorter period.

6 Things You Must Know Before Obtaining a Mortgage

Before you commit your hard-earned dollars to monthly mortgage payments. Practical consideration of these critical areas can make your payments work much harder for you.

1. You can and should get pre-approved for a mortgage before you go looking for a home

Pre-approval is easy and can give you complete peace of mind when shopping for your home. Your local lending institution can provide you with written pre-approval for you at no cost and no obligation, and it can be done relatively quickly over the phone. More than just verbal approval from your lending institution, a written pre-approval is as good as money in the bank. It entails a completed credit application and a certificate, which guarantees you a mortgage to the specified level when you find the home you're looking for.

2. Know what monthly dollar amount you feel comfortable committing to

When you discuss mortgage pre-approval with your lending institution, determine what level you qualify for and pre-assess the monthly amount you feel comfortable committing to. Your situation may give you a pre-approval amount higher (or lower) than the amount you would want to pay out each month. By working back and forth with your lending institution to determine what this monthly amount is and what home value this translates into at today's rates, you won't waste time looking at homes that are not in your price range.

3. You should be thinking about your long-term goals and expected situation to determine the type of mortgage that will best suit your needs

You should ask yourself several questions before committing to a specific type of mortgage: How long do you think you will own this home? What direction are interest rates going in, and how quickly? Is your income expected to change (up or down) soon, impacting how much money you can afford to pay for your mortgage? The answers to these and other questions will help you determine the most appropriate mortgage you should seek.

4. Make sure you understand what prepayment privileges and payment frequency options are available to you

More frequent payments (for example, weekly or bi-weekly) can shave years off your mortgage. Structuring your payments so they come out more frequently will significantly lessen the interest you will be charged over the term. For the same reason, authorized prepayment of a certain percentage of your mortgage or an increase in the monthly amount will significantly impact the years you will have to pay and could shorten your payment term considerably. These two payment options can cut years off your mortgage and save you thousands of dollars in interest. However, not every mortgage has these prepayment privileges built in, so ask the proper questions.

5. Ask if your mortgage is both portable and assumable

A portable mortgage, where available, is one that you can carry with you when you buy your next home and avoid paying any discharge penalties. This means that you will not have to go through the entire mortgage process again unless you are making a move up to a much more expensive home. An assumable mortgage is one that the buyer for your home can take over when you move to your next home. This can be a potent tool at the negotiating table, making it much easier and more desirable for a buyer to buy your home, and again, it saves you any discharge penalties.

6. You should seriously consider dealing with a Mortgage Expert

Consider dealing only with a professional who specializes in mortgages. Enlisting their services can significantly affect the cost and effectiveness of the mortgage you obtain. For example, they can make the process faster, avoiding costly delays. Typically, there is no cost or obligation to inquire.

When you start looking for a new house, you don't want any unpleasant surprises that could cost you your dream home. By understanding these tips and strategies, you will be well on your way to buying a home that meets your needs and provides enjoyment for years to come. I hope you found this post helpful, but please realize that this is just a tiny part of the overall process. Please call us at 858-281-4659 to build a plan together to realize your goals.

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