The Most Common Mistakes People Make When Shopping For Home Loans
Buying a house can be one of the most exciting developments in someone’s life, but it can also be one of the most stressful, unfortunately. Many people don’t know what to look for when they are shopping for a home loan. Just like any decision you are going to make in life, it’s important to gather the facts so you know what decision is the best one to make for you! In my years as a home loan officer, I have seen everyone from first time homebuyers to people who have made several moves and those who are pursuing investment properties make the same type of mistakes when shopping around for mortgages. Without further ado, here are some of the most common mistakes that people make in the process of shopping for home loans:
Common Mortgage Mistakes
- Not taking the time to get fully pre-approved. When making a big decision like shopping for a home loan, there is a lot of terminology and options that you will need to educate yourself on. Instead of doing these things online, I urge you to find a reputable mortgage lender in your area and ask for their assistance with getting a pre-approval. The pre-approval process basically consists of an overview of all of your financials; after this, your lender will go over a few different mortgage scenarios with you. This not only will help you for the payment, down payment, and any other anticipated scenarios, but it will allow you to narrow down your price point when shopping for a home.
- Using an online mortgage calculator that is unaffiliated with your lender. Many of the mortgage calculators you’ll find online are off when it comes to factors such as amortization, mortgage insurance, estimates for property taxes, credit score, property type, and occupancy type, among other things. Rather than take this approach, call your loan officer directly. Chances are, they can provide an app or a calculator that is tailored specifically to these unique factors.
- Not anticipating the total cost when buying a home. There will be a multitude of payments and fees you’ll have to get in order when closing in on a home – not just the down payment! Other things to consider are inspection fees, appraisal costs, or even extra fees that lenders will charge to lock in your interest rate. You will need to factor in costs such as principal interest, taxes, HOAs, and home warranties. A reputable loan officer will give you exact estimates on all costs before you submit offers, so you’ll be fully prepared to close.
- Changing your financial situation. This may include applying for new credit, changing jobs, and/or making large cash deposits that can’t be documented. These are definitely things that could be considered a financial faux pas if you’re looking to be considered someone who is safe to lend money to. These last-minute lifestyle choices can be especially problematic if you fail to communicate them with your loan officer. If, God forbid, a last-minute lifestyle change were to occur that was out of your control due to unforeseen circumstances, don’t sweep it under the rug – contact your loan officer ASAP to let them know and see how they can work with you.
Getting a mortgage may seem like a daunting and mundane process, but I, along with many other loan officers, are here to help! Taking the time to avoid these mistakes could actively save you a couple hundred thousand dollars on your mortgage! If you want to know more about this topic, feel free to get in touch with me or leave a comment below – I’d be happy to answer all of your questions!
