Buying your new home should be a fun and exciting experience, but for many home-buyers the excitement is quickly replaced with anxiety and concern. We don’t want our clients to feel this way, which is why we provide all the tools and information you need when purchasing a new home. Still, many homebuyers end up making the same basic mistakes that can lead to mortgage dread in the future. To help our clients enjoy one of the most exciting purchases of their life, here are our top five mortgage mistakes to avoid.
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Not Running a Credit Check- Your credit score is one of the few factors that can drastically increase your chances of getting approved for a home loan. A high credit score will lead to lower interest rates, while a low credit score can cause you not to get approved. Before you begin the process to get a home loan, run a credit check on yourself to save time and money. If your credit score is low, you should spend a considerable amount of time fixing it before you begin the home loan process.
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Not Getting Pre Approved- Many homebuyers begin looking at homes before they get pre approved for a home loan. It can be disappointing to realize that you have wasted time looking at homes that you cannot afford or to find out that you need to fix your credit before purchasing a new home. Pre approval can help make the process easier and less stressful by giving you a set amount you can afford.
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Not Putting Money Down- One of the biggest mortgage mistakes made by home buyers is putting little or no money down on the house initially. Private mortgage insurance rates are often tied to the amount of money borrowed, so the more money you borrow the higher the insurance rates are. Not putting money down on a house is a good way to end up in financial distress.
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Not getting a Fixed Rate Loan- Fixed rates aren’t for everyone, but if you plan on being in your new home for a long time, adjustable rate mortgages can end up costing you more money than you expected. Adjustable rate mortgages are usually readjusted once a year based on various housing indexes after their initial reset period. If you planned on paying a set payment every month only to have that rate increase every year annually, you are going to have a hard time getting the payment together on time.
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Making Decisions Before the Loan is Closed- Some decisions can destroy your home loan if you make them before the loan has closed. If you open a new line of credit during the loan approval process, you will most likely get denied because it shows potential debt. Avoid big purchases and maintain consistent employment. These show lenders that you will have the ability to pay the loan for the foreseeable future even in the case of an unexpected event.
If you are interested in getting approved for your first home loan or if you want to refinance, you can contact Joe Libin here or by calling him at 801.639.9000. For additional information, please check out my mortgage calculator or call me today.
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