7 mistakes most people make while applying for a home mortgage
When purchasing your first home, there are several decisions that you need to make. The overall experience can be exciting, while for first time buyers, things can get scary. When shopping for home mortgage companies in the St George area, you ought to be wise to dodge some of the mistakes most people make. Past home mortgage borrowers have shared how they regretfully ended up making a remorseful buy after applying for a loan they could not repay.
In this post, we look at the top seven mistakes most people make while applying for a home mortgage. You will learn how to avoid falling into the same trap. Let us jump right into the topic of the day.
- Not Checking and Fixing the Credit Report before beginning the home mortgage application process
Before you even think of applying for St. George mortgage, the credit score should be the first thing to check. Consider that when applying for a mortgage, the financial institution will calculate your credit score. The objective is determining how much you qualify for and informs the lender of the best interest rate for your mortgage. Take advantage of the free credit monitoring services to check your credit score and work on ways to improve the credit rating.
If your credit rating is poor, you risk the cancellation of the application. Even if the mortgage lender approves your loan, the amount is likely to be less than what you wished they would lend to you. With a positive credit rating, the St George mortgage companies will approve your mortgage application without any delays.
Check the credit score at least a year before applying for a mortgage. This gives the borrower plenty of time to work on repairing their credit score.
- Ignoring the true cost of homeownership
Home ownership comes with other charges apart from the total cost of purchasing the property. For instance, you have to maintain the property on an annual basis, to maintain the current value and secure a better resale value, if planning to resell the property.
In most cases, the cost of property maintenance is usually 1% to 2% of the home purchase value. Therefore, if your property costs $500,000, the cost of annual maintenance is likely to be $5000 to $10000 on an annual basis. The cost caters to things like HVAC maintenance, plumbing fixes, lawn maintenance, and normal repairs.
Most homebuyers end up shocked when they find that they cannot afford to repay the loan while paying the high maintenance fee. Therefore, before you apply for a loan, find out a property that you can easily maintain while repaying the loan.
- Looking for a home before you have applied for a mortgage
When thinking of purchasing a new home, most people end up shopping for a property even before calculating how much loan they qualify to borrow. This creates a situation where the borrower is wishing for more than they can afford. Consider that even if you paid a down payment to secure the property, you will end up losing this property if you aren’t pre-approved for a mortgage. That is always the case, so long as it is a competitive market.
In that regard, before you start looking for a property, talk to the home mortgage lenders near you, to find out how much they can lend you. adding this to your savings gives you a sense of the kind of property you should be shopping for.
- Talking to just one lender
When taking a mortgage for building a house or buying a readily built home, consider talking to multiple lenders. First-time homebuyers are so excited, and end up applying for a loan hurriedly without talking to other lenders to find out their terms.
You will be shocked that lender Y would have given you better terms compared to lender X. To avoid paying high-interest rates on mortgage loans than what the market is offering, talk to more than one St. George mortgage companies. The more you shop around, the closer you are to get a better deal. Experts recommend that you talk to more than three lenders, comparing their rates, the lender’s fees, and overall loan terms.
- Draining all the savings on down payments
One of the biggest and most regretful mistakes that homebuyers make is spending all of their savings on the down payment, or the closing costs. Sometimes, this is in a bid to qualify for a no mortgage insurance loan or mortgage loans with a low down payment. This places you at risk of living on the edge. Instead, make sure you do not deplete the emergency funds, which can make you live miserably waiting to repay the whole loan to start saving again. instead, set up a separate account where you save for the closing costs and the down payment amount without touching the savings.
- Not disclosing everything to the lender
A financial problem is common in most people’s lives. The mortgage companies understand this, and there is always a way to help a client. It is important that the borrower disclose everything to the lender before applying for a mortgage for building a home. Be open and honest when asked the screening questions. This will make it easier for the lender to advise you accordingly, choosing a product that best suits your lifestyle.
- Not reading what others have been through
Sometimes, borrowers are so concerned about purchasing a property, ending up making uninformed decisions. Although time is critical, it is important you talk to your relatives, colleagues, and friends who have been through the same. You will get tons of reviews helping you to choose the best St George Mortgage company.
Do not make the seven mistakes when applying for a home building mortgage in St George. For best financial advice, talk to Staplesmortgage.com on home buying mortgages.