Being a successful homeowner starts with avoiding mistakes. Everyone makes mistakes, but if you make a mistake when you are buying a home, it can cost you! For some homebuyers, mistakes are small, for others, it can costs thousands of dollars and may end up costing you your home. So what can you do to avoid those mistakes? Here are some things to watch for:
-Buying more home than you can afford. One question I always ask my clients is “what are you comfortable with in a house payment?” I ask because I want to make sure they have thought about it. It also tells me if they are conservative with their money or if they think they can afford the whole world! Just because you can afford a house payment according to the mortgage qualifications, doesn’t mean you want to spend that much. When I qualify someone for a home, I don’t have to look at what they spend their money on – unless it’s on the credit report. But if you have an expensive hobby, you may not want to send that much on a house. Maybe you like to travel, maybe you are thinking about having kids, maybe you want to buy a car. Keep in mind what you are going to spend your money on and budget for those things.
-Starting the home search before getting your mortgage approval. If you start shopping and don’t know how much you can afford, you may find a home you love only to find out you can’t qualify for it. The biggest problem with that is that all the homes you look at will compare to the home you can’t afford. You also want to make sure you have that mortgage approval so if you find a home you love, you don’t lose it while you are trying to get your approval.
-Not shopping around for your home mortgage. Of course I want you to use me for your lender, but I also know that it is smart to compare numbers and programs. I have had many clients come to me because their lender didn’t know about first time homebuyer programs. I also have been able to help clients that were not able to get approved with other lenders. It pays to shop around and make sure you are getting the best deal you can but you also want to make sure your lender can get the deal done. There is nothing worse than finding out you are going to have problems right before closing. Talk to your lender and make sure you are comfortable with them – remember you do get what you pay for, sometimes the cheapest person may not be the best person to get the job done.
-Not learning about different loan programs. Most people know about conventional loans, many also know about FHA loans. What about VA and USDA loans? What area are you buying in? Are there any special programs that might help you? Are you a first time homebuyer? Do you need help with a down payment? There are programs to help many people but not every lender works with these programs. Ask around to find out if there is something that might help you buy your next home.
-Delaying your purchase to save more money for a down payment. I still hear from clients that think they need 20% down. You can buy a home with as little as 3% down – in some cases 0 down. As home prices go up and interest rates change, waiting to save 20% for a down payment may cost you money.
There are many things that can affect your home purchase – make sure you are comfortable with the people you are working with, you want to work with a realtor and loan officer that you trust, this is a big decision and you need people that will work with you to help guide you. Ask questions and make sure you understand the process. Starting the process with a loan approval and knowing what you are comfortable with in a home will help to make your home purchase a great one!
Leslie Vanderwerf, NMLS ID#335509, American Mortgage & Equity Consultants, Inc., An Equal Housing Lender, NMLS#150953 – Email – Website
