Applying for a home loan can be like preparing your taxes. It is stressful and confusing. That being said, there are some basic mistakes many people make that can be easily avoided.
Credit score. FICO. Blah, blah, blah. Yes, you have heard and read endless commentary on how important your credit score is the borrowing process. That being said, most people never take the time to look at their credit reports. They just assume they either have good or bad credit, submit their application and hope for the best. This is a bad approach. Check your credit report! Eliminate all erroneous reporting. It can go a long way to helping you get the financing you need.
Just as your eyes may be bigger than your stomach when eating, your home tastes may be bigger than your cash flow. A huge mistake is to buy too much home, which means you borrow more than you can reasonably pay. Remember, the lender is telling you the maximum you can borrow, not what you can afford. You will not enjoy your new home if you are awake all night wondering how you are going to meet the payments! Get something you can afford. Let it appreciate for a few years, then sell it. Use the equity gained to move up to a nicer home.
Stress and anxiety. These two nasty fellows can be a big part of the mortgage application process or you can practically eliminate them. If you make an offer on a home and then try to get financing, stress and anxiety will be maximized while you wait for a decision from the lender. If you get pre-approved before you even go look at a home, the stress and anxiety will practically be eliminated. Get pre-approved!
Shopping is one of the great activities in our modern world. Don’t believe me? How often do you sit on the internet and click to buy something? Well, do you look for the best deals when you shop for a car, clothes, appliances or whatever? Of course, you do. Then why would you not do the same with mortgages?! To get the best deal on your financing, you should shop your borrowing needs. You will be shocked at the different deals being offered and how one can end up costing you tens of thousands of dollars more than another. To save massive money on your loan, shop till you drop!
Obtaining a home loan is a necessary evil if you want to partake of the American Dream. Use a bit of common sense and you should be dreaming with the rest of us.
Learn more about mortgage loans at FSBOAmerica.org