There is no doubt that the mortgage process can be an intimidating and confusing process for the uninitiated. Let’s look at the situation: you are putting yourself into debt for the next 15-30 years, signing stacks of paperwork, and learning about new fees every day. In such a stressful environment it easy to make mistakes and the worst part is that you might never even know that you made a mistake.
In order to make sure that you do not pay for that one mistake over the next 30 years it is important to do your homework and gain an understanding of the mortgage process. Below you will find a list of some of the more common mistakes that mortgage brokers and lenders see every day.
Credit problems: It is important to obtain a credit report at least 180 days before you are planning on applying for a mortgage. This will give you time to challenge any mistakes or discrepancies that appear on your report before it gets into the hands of your lender. This will also give you an idea of the legitimate factors that are hurting your FICO score and time to do something about them, such as paying an overdue bill or paying down credit card debt.
Qualifying for a first-time buyers program: If you are a first-time home buyer then you might be able take advantage of the lower rates offered by the many first-time homebuyers programs. These programs were designed to help individuals with damaged credit or small down payments achieve their dream of home ownership. The best way to find out more information on these programs is to call or visit the website of the housing agencies for your state, county, and city to see if you are eligible.
Waiting until the last moment to get approved: Homes more fast in our market and it is important that you are ready to move when you find that perfect home. If you are going to buy a home there is no reason not to turn in the loan paperwork and get approved before you start the home buying process. Horror stories abound regarding buyers who found their dream home and then initiated the loan approval process only to learn the home had already been sold by the time they got their paperwork back.
Not shopping for rates: Some homebuyers are not aware of the wide range of rates that are on the market and could fall victim to subprime lenders. Subprime lenders specialize in securing financing for individuals with damaged credit, at a premium, and occasionally people with good credit unknowingly get stuck with such a loan. It pays to make sure that you know the prevailing interest rate for individuals with your FICO score. If you go to MyFico.com you can enter your FICO score and get an idea of the cost of financing in your area.
Paying Junk fees: Some lenders attempt to line their pockets with a variety of fee, some of which are legitimate and some of which are not. Once more it pays to do your homework beforehand. Contact several different lenders to find out their rates, loan points charged, and any other fees associated with the application. Once you decide on a lender they should give you a good-faith estimate of closing costs, which should include any extra fees. Inquire about any additional fees and try to negotiate the more excessive charges down. If your chosen lender is unwilling to negotiate take the estimate to someone else and see if they will be able to beat it.
Closing Costs: Plan ahead for the closing costs. The day that you are scheduled to get your loan you will also need to pay for expenses such as; attorney’s fees, title insurance, and other lender fees. Closing costs can be anywhere between 2 and 7 percent of the selling cost of the home. The good faith estimate that you received from the lender will give you a good idea of how much you can expect to pay and make sure that you have enough to cover the cost in your bank account.
Cash on hand after closing: After scrimping and saving every penny you were able to secure your mortgage and have moved into your new home. Suddenly, out of the blue your car breaks down and you are stuck with a hefty bill and you run the risk of not having the money to cover your first mortgage payment. When budgeting for your new home it is a good idea to have enough cash to cover your expenses for several months. This will help you get over any unexpected expense speed bumps.
Contact me today for real estate assistance! (619) 890-3648 | Email me
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