Five Mistakes that First-Time Home Buyers should Not Make
If you are like other people, you are probably planning to buy your first home. However, as a first-time home buyer, you are prone to making mistakes. A simple mistake can have you making a purchase you might regret later. You can avoid making the common mistakes that home buyers make when you are aware of them in the first place.
Failing to Determine How Much you can Afford
Knowing how much home you can afford will prevent you from wasting your time. You don’t want to look at homes you cannot afford. A mortgage calculator can help you identify the price range you can afford, what is aggressive or stretched so use this tool. Get some extra help at baudinet.ca.
Not Comparing Mortgage Options
Just like when shopping for a car, you want to compare your options when you shop for a mortgage. Interest rates vary by lenders and so do fees like discount points and closing costs. Comparing options from different lenders will you make a smart choice.
Failing to Check Credit Reports and Correct any Errors
When lenders decide whether or not to approve a loan, they will scrutinize credit reports. If there are errors in your credit report, the lender might quote you with a higher interest rate. So make sure your credit report has accurate entries. Request a free credit report every year and dispute any errors you find.
Not Making a Bigger Down Payment
You can purchase a home even if you don’t have a 20% down payment. A number of loan programs let you purchase a house with zero down or 3.5 percent down payment. But, a bigger down payment allows you to get a smaller mortgage, providing you with more affordable monthly payments. Ensure you save up for a down payment that will help you secure a payment you are comfortable making every month.
Applying for a Credit During the Home-Buying Process
You have applied for a mortgage and are hoping to get approved and get the keys to your desired home. Before the mortgage closes, make sure you don’t get a new credit card, take out a car loan, or purchase furniture on credit. Keep in mind that the decision of the lender is based on your credit sore and debt-to-income ratio. Applying for credit before your mortgage is finalized can decrease your credit score. Plus, your debt-to-income ratio will increase if you take out a new loan or add to your monthly debt payments.