Are you looking to finance a new home or refinance your current one?
If so, we’ve put together a list of ten mortgage blunders you want to avoid, ensuring homeownership is a joy rather than a burden.
Not knowing what you can afford. Get pre-qualified or pre-approved before you even start looking at homes.
Not locking in your interest rate. If you’ve been pre-approved and have a new home picked out, lock in your interest rate. Failing to do so risks the rate going up which could cost you thousands. If you can get a fixed rate, do it.
Overlooking home maintenance costs. You need to budget 1% - 2% of your mortgage balance as a yearly maintenance and repair fund on top of your monthly payment.
Not choosing a VA loan if you qualify. With no down payment requirement, low-interest rates (even if you have poor credit), and safeguards in place to keep you from overbuying, VA loans are a powerful mortgage vehicle for those who qualify.
Not checking your credit report before you begin the home buying process. Credit reports are notorious for containing errors. Failing to check your credit before a prospective lender means you might be in for a few costly surprises. Check all three credit bureaus free at Annual Credit Report.1
Not paying attention to APR. At first glance, one loan option may seem cheaper because of its lower interest rate, but in reality, it may cost more due to higher closing costs and pre-paid discount points. Compare the annual-percentage-rates (APR) to assess your options accurately.
Making big purchases or opening new credit cards. Buying large-ticket items on credit before or during the loan process can hurt your credit score and increase your debt load leading to a higher interest rate on your loan.
Applying for a mortgage without adequate employment history. Lenders want to see at least two years of consecutive employment. This proves stability and steady income.
Listing your home for sale then deciding to stay put and refinance. Lenders don’t like giving you a loan on something you tried to get rid of just months before.
Not shopping around for the best loan. Be willing to put in the hours necessary to snag the lowest interest rate and closing costs. Even half a percent could mean thousands of dollars in the future.
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