For potential home buyers taking out a mortgage can be a daunting experience. According to a mortgage survey taken by Freeandclear, 32% felt the mortgage process was overly complicated and stressful. Here are three mistakes to avoid when it comes to obtaining a mortgage.
Always shop around for a mortgage. Not shopping around for a mortgage is a big mistake. In fact, finding the right lender is a very important step in the homebuying process. Potential homebuyers can save thousands of dollars over the lifetime of their loan. Call several lenders and compare rates and fees by requesting quotes. These fees are negotiable so you should always compare at least three different quotes. Surprisingly around 50% of U.S. homebuyers do not comparison shop when it comes to mortgages.
Never skip the preapproval process. It is always a good idea to go into your home search with your eyes wide open to what you can afford. Sometimes what we think we can afford doesn’t sink with what the banks will lend us. Many homebuyers do not realize that your credit and income plays a big part when it comes to the purchase price. Getting pre-approved will help you get a better understanding of how much house you can afford. Showing a potential seller a pre-approval letter lets them know you are serious.
Thirdly, always familiarize yourself with the basic terms and the lending process. Shopping around for a mortgage can be less stressful if you understand terms such as FHA loans, ARMs, and fixed rates. If you are better equipped, you will be able to choose the best option and specific loan that fits your financial situation.
Purchasing a home is one of the biggest decisions we will make in our lifetime. The more information you know, the better decision you will make.
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