How to Avoid Homebuyer Mistakes During The Mortgage Process

This article covers How to Avoid Homebuyer Mistakes During The Mortgage Process.

How to experience a smooth home buying and mortgage process with no stress:

  • The home buying and mortgage process does not need to be stressful.
  • Certain mistakes to avoid for home buyers.
  • Monitoring bank accounts and credit reports.

How to Make Sure the Mortgage Process Runs Smoothly 

The home buying and mortgage process does not have to be stressful. Most mortgage borrowers will be new to the mortgage process unless they are professional real estate investors.

However, getting educated in the overall mortgage process is one way to avoid stress during the homebuying and mortgage process.

Learning How To Avoid Homebuyer Mistakes during the homebuying and mortgage process will definitely relieve stress and avoid delays in mortgage closings.

How to Avoid Homebuyer Mistakes Prior To Entering Into A Real Estate Purchase Contract

How To Avoid Homebuyer Mistakes Prior To Entering Into A Real Estate Purchase Contract

The home buying process can be very exciting and stressful at the same time.

We can discuss How To Avoid Homebuyer Mistakes by going over the most common mistakes made by home buyers. One of the most common mistakes made by homebuyers is skipping the mortgage pre-approval process.

They take it for granted they have good credit and down payment so what they do is have the home purchase under contract and then apply for a mortgage. Skipping the pre-approval process can often lead to closing delays or the borrower may not qualify for a mortgage.

The very first step of the homebuying process should be getting pre-approved. See how much home you can afford versus how much you qualify. Research the best loan program which suits your goals and needs.

Shop for the best mortgage rates. Not all lenders have the same rates. See what you need to do to maximize your credit scores. Higher credit scores mean lower mortgage rates. Make sure to go over the various mortgage programs and terms with your loan officer.

How To Avoid Homebuyer Mistakes By Not Buying A Dream Home You Cannot Afford

How much home can I afford? This is the most important factor all homebuyers should consider. It is not how much home you can qualify for but how much home can I afford. Michael Gracz of GCA Mortgage Group said the following:

Falling in love with a house you can’t afford can be very dangerous and a future road to foreclosure. Because of all the hidden costs of owning a home, like routine maintenance, insurance, and repairs, it’s a good idea to spend less than you’re approved for. It can be tempting to tour homes at the top of your price range, though, especially if you’re disappointed by the design and curb appeal of homes within your budget. But touring beautiful homes you can’t really afford will only lead to disappointment and make it harder to settle on a home in your price range, so try to avoid it. You can always paint or replace flooring down the road once you settle in. One of the worst homebuying mistakes you can make is forgetting to account for closing costs in your budget. On average, buyers can expect to pay between 2% and 5% of a home’s purchase price on closing costs. It’s a good idea to talk to your loan officer to determine what you can expect as far as closing costs, homeowner’s insurance, etc. so that you are well prepared.

Monitoring Your Bank Account And Credit Reports

How To Avoid Homebuyer Mistakes By Monitoring Your Bank Account And Credit Reports

Overdrafts in bank accounts and late payments in the past 12 months can be deal killers when it comes to qualifying for a mortgage.

Monitor your checking accounts and make sure you will not get any overdrafts. Many lenders will automatically deny applicants with bank overdrafts in the past 12 months.

Many lenders consider that consumers with overdrafts in their checking accounts cannot manage their finances. They are often scared they will bounce their new mortgage payments.

Check your credit reports and make sure you have no credit disputes. Credit disputes during the mortgage process are not allowed. All credit disputes, with the exception of medical disputes, need to be retracted for the mortgage process to proceed.

Your loan officer will help you maximize your credit scores. Higher credit scores mean lower mortgage rates. If there are errors on your credit report, your loan officer can help you correct errors with a rapid rescore.

Types Of Mortgage Loan Programs For Homebuyers

There are various different types of mortgage loan programs.

Go over with your loan officer the best mortgage programs and terms. VA and USDA loans offer 100% financing with no down payment required.

In most cases, closing costs do not have to be paid by borrowers if they can get a seller’s concession from the home sellers. FHA loans require a 3.5% down payment for homebuyers with at least 580 credit scores.

Borrowers with under 580 FICO and down to 500 can qualify for FHA loans but need a 10% down payment. Conventional loans require a 5% down payment.

Fannie Mae and Freddie Mac offer 3% down payment conventional loans for first-time homebuyers. Non-QM mortgages do not require any waiting period requirements after bankruptcy and foreclosure.

Non-QM loans allow late payments in the past 12 months. However, a 10% to 20% down payment is required on non-QM loans.

There are so many unique loan programs that are available. Please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response to go over the best mortgage program and terms for your individual needs. Or email us at [email protected].com.

Buying Older Versus Newer Homes

Reserves for potential repairs are not required by lenders.

Reserves for potential repairs are not required by lenders.

  • When buying an older home, homebuyers should hire a home inspector and make sure there are no major renovations required
  • The HVAC, plumbing, electric, septic, and well systems should be thoroughly inspected and checked for longevity
  • These are high ticket cost repairs
  • Older homes may need repairs
  • Appliances are another high ticket cost items
  • A new refrigerator and washer/dryer set may cost several thousand dollars

Dale Elenteny of GCA Mortgage Group said the following:

First-time homebuyers often don’t budget enough money for home repairs and renovations. This may be because they’re used to seeing effortless renovations on TV and having a landlord who takes care of routine maintenance for them. If the air conditioner breaks or your washing machine conks out, it’s always smart to have a cushion. That’s why it’s important to understand the potential costs and have an emergency fund that’s separate from your down payment. Another good thing to consider would be signing on for a home warranty.

Buying Versus Renting

For those who know where they want to live and can keep their home purchase for at least five years or longer, buying is definitely better than renting. Longer-term thinkers will benefit from gaining equity in their home purchases. Selling a home too early after buying it can cost homeowners money. To recoup the costs of a home purchase, they need to keep the home for at least three years. Homeowners have full control of their property. They are no longer dependent on a landlord that can not renew their lease. Renters need to get permission to paint and/or decorate their apartments and/or homes by their landlords. You cannot own a pet without the landlord’s permission. However, homeowners have full control. Homeowners can have a dog and/or cat or both. They can plant a garden and decorate their homes the way they want.

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