5 Mortgage Mistakes First-Time Buyers Often Make
As a first-time buyer, you are probably super excited about the prospect of purchasing your own home. Hopefully, you aren’t so excited that you forget just how expensive this project is going to be! It is important for you to take your time while finding the perfect mortgage for your needs.
Unfortunately, many first-time buyers make one or more of the following mistakes, each of which can cost you quite a bundle of money when taking on a home loan. If you’re looking for a home around the San Jose talk with an experienced San Jose real estate agent who can help you avoid these issues.
- Not Researching the Best Rates and Terms
Going to a single lender and taking whatever deal is currently being offered is a terrible way to obtain a mortgage. Comparing the interest rates and fees offered by several lenders is a good way to save money on your mortgage. All too often, home buyers worry about the price of the home, giving little thought to the ways they may be able to save money if they shop around for the best mortgage offer. Make sure you shop around or use a mortgage broker that will shop around for you.
- Requesting More Money than You Can Afford to Comfortably Pay Monthly
While you may not know exactly how much money you can afford to borrow, you should attempt to get a rough idea before you contact a bank/lender to request a loan. Asking for 750 thousand dollars or more when you don’t have the income to justify your claim of being able to pay it back will not go over well. Based on your current income find out how much of a loan you would qualify for. Being pre-approved or pre-qualified for a loan up to a certain amount will confirm how much house you can afford. For more details on this topic read our previously posted blog on the difference between being pre-qualified and pre-approved for a home loan.
- Waiting Until You Apply for a Mortgage to Get Your Finances in Order
Finding a good interest rate delivers a good opportunity to save on your monthly mortgage costs. Unfortunately, if your credit history is filled with missed payments and lots of debt, you aren’t going to have access to the best available interest rates. Don’t wait until you apply for a home loan to try and get your finances in order. You should start this task at least six to twelve months ahead of time if you want your efforts to have a favorable impact on your ability to secure a loan with the lowest interest rates.
- Quitting One Job to Take Another
While the new job listing you just saw may appear tempting to you, it is best to avoid doing anything about it until after you have finalized your home purchase. Lenders look at your employment history to determine whether or not you are credit worthy enough for a large mortgage. If you switch jobs right before or during the time needed to process your mortgage application, doing so puts you at risk of being denied the loan.
- Not Filling Out Your Loan Application Completely
Sometimes prospective home buyers omit pertinent information on their mortgage applications because they believe it will go against them. For example, having alimony or child support payments is an expense that lowers the amount of money an applicant has available to repay the loan. However, if your lender finds out that you purposely omitted this information, your loan may be denied anyway.
If you are buying a home for the first time, you can save yourself time, money, and stress if you follow a few common-sense rules before you begin. Buying a home is a big expense especially in San Jose and Santa Clara County. Any effort you make to save money while doing so is usually well worth it. Take the time to get your finances in order and research your options well to advance your chances of securing an affordable mortgage.
If you want to buy or sell a home in San Jose and need guidance contact our office to work with an experienced and knowledgeable San Jose real estate agent.
Curious about the steps it takes to buy a home? Read the 12 steps and follow along with the home buying flow chart.