Common Mortgage Mistakes And How To Avoid Them
When searching for a new home, you may start by checking square footage, or the size of the backyard, or the amount of natural light. And while these things are important, you need to remember that buying a home is one of the biggest financial decisions you will make! That’s why you want to avoid making mistakes in the mortgage process. After all, paying even .5% higher in interest on your mortgage for 30 years can end up costing you tens of thousands of dollars.
Start your journey to homeownership right by learning more about mortgage financing. And know that the mortgage experts at Patriot Home Mortgage are here to help you every step of the way. We serve clients across the west, including in St. George and Mesquite.
Spending Too Much
Lenders are legally prevented from approving mortgages that are more than 35% of your household income, but it’s recommended that you don’t go all the way up to that limit. Just because you may be able to get a large home loan doesn’t mean it’s a good idea. You want to make sure you have room in your budget for an emergency, like a hospital bill or losing your job. While it’s enticing to imagine yourself in a more expensive home, think about the financial burden you’re taking on. You want to be able to feel comfortable in your home and not worry about making your mortgage payment each month.
Not Shopping For The Best Rates
You’re probably looking at multiple homes before choosing the right one, so why wouldn’t you also apply that logic to your mortgage financing? While it may seem like a loan is a loan, you can find better rates by shopping around to different mortgage companies. While it’s not as exciting as touring homes, comparing fee structures and rates and looking out for promotions can end up saving you thousands of dollars over the lifetime of your loan.
Not Choosing The Best Loan Type
Many homebuyers believe that their only option is a conventional mortgage — after all, that’s the most common type of home loan! But there are many different loans, and you may qualify for an FHA or USDA loan that is backed by the government and gives you better rates. Are you worried that a low credit score may stop you from getting a mortgage? There are home loans available that are specifically designed to help first-time buyers or people with less-than-ideal credit buy a home.
There are even different types of conventional mortgages, and a mortgage company like Patriot Home Mortgage can help you understand the difference between them. For example, a low fixed interest rate that comes with the first part of an adjustable-rate mortgage can seem tempting, but the fluctuating rate can end up costing you more than you anticipated.
Ignoring Hidden Costs
If you’re thinking that the only big expense you’ll have at closing is the downpayment, think again. There are many other expenses during the homebuying process, and that’s why it’s important to have a team on your side to help negotiate some of these expenses for you. You should be prepared to pay for your home inspection, appraisal, initial escrow deposit, title fees, and loan origination fees along with your down payment. In addition, you should plan for other expenses after you close on the home, such as repair costs or a home warranty.
Making Changes To Your Credit
Some people try to adjust their credit score before applying for a home loan, such as trading in their car or closing a credit card. However, these changes can actually hurt you. For example, spending $3,000 to pay off your car loan may seem like a good idea, but it could be such a minor boost (or even hurt your credit) that it’s better off saving that money and using it as a downpayment on your home. If you’re unsure about what to do, talk with a mortgage company like Patriot Home Mortgage in Mesquite or St. George before making any significant financial decisions.
You don’t want to be caught with hidden repairs or damages, and it’s vital to have a thorough home inspection before buying a home. You don’t need to settle for a general home inspection, you can also choose to get a property survey, termite inspection, electrical inspection, and more. And while you don’t need to spend money on every single inspection, you can add on a more specialized inspection if the general inspector suggests that there is a particular area of concern.
Not Building Your Homeowner Team!
Finding the right home loan can be an overwhelming process, but know that our mortgage company is here for you and ready to be part of your hometown team. Don’t make such a big decision on your own. If you’d like to talk about your situation or start the mortgage financing process, contact us in St. George or Mesquite. We provide services for conventional mortgages, VA loans, USDA loans, jumbo loans, reverse mortgages, and more. Follow our blog to learn more, and contact us today to get a free consultation and start the mortgage application process.