Whether you are about to buy your first home or you want to upgrade to a bigger home, it’s important to be informed about all of the factors involved in making a home purchase.
This article will reveal the most common mistakes home buyers make in mortgage shopping and how they can impact the outcome of purchasing your new home.
When you are informed and approach mortgage shopping correctly, even small changes in the way you structure your mortgage can actually cost you or save you thousands of dollars and years of expenses!
Here are the 4 Things You Must Know Before Obtaining a Mortgage:
# 1: You should get pre-approved for a mortgage BEFORE you start looking for a home.
Pre-Approval is free and easy and will give you complete peace of mind when shopping for a home. It can be done over the phone, online or even in person if you prefer the "old school" way, which is definitely okay! Do what works for you.
A written pre-approval is as good as money in the bank. You will be asked to provide a few items such as a completed credit application, verification of your income/tax returns, bank statements, verification of employment, etc.
# 2: Know your mortgage dollar amount and the costs associated with obtaining the mortgage.
Know what to expect and feel comfortable with the monthly payment amount and the out of pocket expenses when purchasing a home. This will give you clarity about the price range you should be looking in, what homes are available in your location, etc.
You will save time by only looking at homes that match your criteria! And time is money.
# 3: Understanding your mortgage options and how they affect your long term goals.
There are many mortgage types available. Asking your lender to provide you with a comparison between them is important.
Understanding interest rates will set you on the right track and save you time and money in the long run.
Some things you should ask your lender about: APRs, prepayment penalties, assumable mortgages, mortgage insurance premiums and insurance, down payment options, break down of pre-payment items and closing costs, escrow accounts, and other estimated items.
# 4: You should seriously consider dealing with a mortgage expert.
Not all lenders are equal just like not all agents are equal.
Consider dealing only with professionals who specialize in mortgages. Ask your real estate agent, friends or family members for referrals!
Have at least 3 lenders to consider and interview them. Compare their rates, loan origination fees, and how fast they can close your loan.
In my experience, the bigger the bank is the more regulations there usually are and this can slow down the closing process.
Please comment below and let me know how I can help you!