How to Avoid the 7 most Critical Home Buying Mistakes
July 17th, 2008 Subscribe To Our Feed
1. Have your credit checked early in the process. Most people do not know their credit scores or what really determines a good credit score. It is not enough to get a free credit report from a single credit reporting agency. It is important that you have a mortgage planner obtain a tri merge report. This will provide scores from all 3 reporting agencies. Typically the lender will take the middle of the three scores when qualifying an applicant. It’s important to determine if there are credit issues early on. Many times they can be corrected in a matter of weeks and will raise your score. A low credit score can cost you many thousands of dollars in mortgage interest.
2. Do not Accumulate new Debt. Many people begin to get very excited at the prospect of buying their dream home. They begin to think about all the items they will need in their new home. New appliances, furniture or even how a new car will look in the driveway. Don?t laugh, I see it all the time. Do NOT accumulate any new debt prior to closing on your new home or it will through off the qualifying ratios and could cause you to lose the home.
3. Know your mortgage Planners experience and ability. It is vital to have someone with experience handling the largest purchase of your life. Sometimes people will have a friend or relative that’s in the “business”. Often this is an inexperienced person trying to earn part time income. It is important to have an experienced mortgage Planner on your side to consult, negotiate and oversee the details of your transaction. Find out what credentials they have. Are they licensed? Do they have a certification in the particular loan programs you are interested in. How long have they worked full time in the industry? Your mortgage Planner will be responsible for your largest purchase - make sure that you have confidence in that.
4. Thinking there are only 1 or 2 Loan Options. Many buyers assume that there are only a couple loan options available to them. Perhaps they are told by a bank that they need 10% - 20% as a down payment and so assume that they must continue renting until that have that money saved. Make sure that you speak to an experienced mortgage Planner to determine ALL your options. Today, there are dozens of home loans available. Some that require no down payment at all.
5. Being unaware of how changes affect your credit score. It’s important to know what will affect your credit score. Often people think that what they’ve done will improve their score when in fact it drops it. For instance, never close your credit accounts prior to buying your home. Closing a credit account will cause your score to drop, at least temporarily. Be careful how many people check your credit as well. Lenders will view this as you trying to obtain new credit and lower your score also.
6. Do not hide past credit difficulties. One of the most important functions that a good mortgage Planner provides is helping you obtain your mortgage by overcoming past credit problems. Your mortgage Planner is on your side and while past credit problems may be embarassing it will often be found out somewhere down the line. Be sure to explain everything to them so they can provide you with the best possible service.
7. Be sure to get a mortgage Pre-Approval. A mortgage pre-approval is a fast and simple process that cannot be overlooked. A seller will want to know that you haev preapproved prior to negotiating a price with you. The preapproval shows the seller that you are not wasting their time and are negotiating in good faith. It will also give you a great sense of security as you are shopping for your dream home.
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