Common Mistakes Home Buyers Make (and How to Avoid Them)
Because buying a home is such an exciting time for home buyers, it is easy to get caught up in the process and make simple mistakes. Unfortunately, when making such a large purchase, a simple mistake can have a big consequence.
For this reason, we have put together this list of common mistakes that home buyers make along with tips on how home buyers can avoid them.
Not Knowing Your Credit
As home buyers quickly realize, your credit score will play a big role in your ability to secure a mortgage. On top of that, the score will in part dictate what interest rate you will be eligible for.
It is important for home buyers to avoid the impulse of sticking their head in the sand when it comes to their situation and instead actually dig into their credit score. Your credit report will not only provide you with an up-to-date look as to where you stand, but it will also show you what your past history looks like.
When applying for a mortgage, this is exactly what your lenders will be looking at. In this situation, ignorance is not bliss, but is instead expensive.
Home buyers will want to order a copy of their report well before they begin the home-buying process. The reason for this is that it will allow ample time to make improvements or fix costly errors before applying for a mortgage.
It is common for a credit report to show inaccurate information or mistakes, which is why home buyers need to be diligent in both reviewing what their report has to say fixing any errors that are found.
Starting with Your Home Search
It is understandable for home buyers to be excited by the prospects of a new home. However, a common mistake in this approach is that home buyers often find themselves looking mostly at homes that are outside of their home buying budget. This is why it is important to schedule a session with a lender to calculate an actual home buying budget.
Your lender will be able to look at your financial standing and work with you to determine what a realistic monthly mortgage payment would look like for you. Those home buyers who save this step until after they have found a home that they love will only be disappointed once they find out they cannot afford it.
By getting this information in hand early in the process, home buyers will be able to be more efficient in their home search as well as safeguard themselves against disappointment.
Celebrating too Early
So you have boosted your credit score, talked with a lender to establish your budget, got yourself to pre-approved for a mortgage, and have made an offer on a house. Even though your home offer might have been accepted by the sellers it does not mean that it is now a done deal. Home buyers will want to hold off on both the celebrations and big money purchases until the closing process is complete.
It is common for home buyers who have their offer accepted to go out and make big purchases on items to furnish their new home. However, these big purchases will still be reviewed by your lender and have the potential to impact your mortgage application in a negative way.
For this reason, home buyers will want to be patient with any big purchases. Hold off until the paperwork has been signed and the keys are in your possession.