Buying a home is actually a drastic change in your life, especially financially. That being said, most homebuyers have little to no knowledge of housing market trend, of how loan rates, debt rations, and credit checks work. It is imperative that you know of practices that may get you stuck in a financial swamp
Watch out for these 8 blunders you might make before applying for a mortgage loan:
1.Not Paying Attention To Credit
It is important to start off analyzing credit because this is your financial reputation. Mortgage loan brokers and banks consider your credit score performance before determining your loan rate.
Bad credit often equates bad loan deal; make sure to monitor your credit report prior to loan application.
2.Low (Or No) Down Payment
While having a loan rate with minimum down payments sounds more comfortable—and it is for the time being—but the decision maybe the wrong one in the long run. Not only does it take a longer time for you to complete mortgage payouts, but you may receive a higher interest rate on each payout.
3.Not Considering Non-Mortgage Costs
Down payment and monthly premiums are not the only expenses incorporated when you purchase a home. You need to realize the significance of home repairs and maintenance, insurance, and tax cuts.
Homebuyers who ignore these homeownership costs often end up choosing a property too expensive for their financial strength.
4.Too-High Loan Terms
Mortgage loans are conventionally termed up to 10, 15, and 30 years. Homebuyers may agree to loans termed over 30 years, which is frankly financially damaging in terms of higher interest rates. Moreover, buyers may end up with less equity on their property.
5.Carrying More Than One Mortgage
Homebuyers who do not sell their current property before they buy a new one find themselves burdened with two mortgages. The stress of excessive financial responsibilities often leads to them selling their old property at a considerable loss.
6.Seeking Financial Advice From Banks Alone
Banks will observe your financial history in terms of gross income. They do not financial contributions for maintenance, utility bills and other miscellaneous expenses into evaluation.
The financial analysis you receive by a bank to determine your home-buying power may not be quite accurate.
7.Carelessness Before Closing
The biggest mortgage holdups are caused when a homebuyer is either carrying incorrect documentations, or their financial situation has faced a drastic change.
Once your loan rate in finalized, make sure to have all documentations in place and NOT make any financial moves till after closing your home.
+1 More Blunder: Disregarding Financial Future
When buying a home, consider your future; you need a clear-cut plan of how familial and professional life will pan out. Responsibilities such as education fees, vehicle purchase and maintenance costs, and career changes should be taken into account.
Need more advice regarding home loans? At e-Finance Mortgage, LLC, we will help you streamline your VA loans, FHA loans or conventional loans. We offer our services throughout California, Colorado, Iowa, Illinois, Michigan, and Washington.
Reach out to our specialists to find a great home loan!