by Dave Koszegi
on Wednesday, August 10th, 2016 at 12:29pm.
We get it. Mortgages are tricky and confusing. There’s a ton of information out there, and many of first time homebuyers can make some big mistakes if they aren’t careful.
In this blog post we’re going to identify some common mistakes - and how to avoid them.
1. Committing too much income to owning a home. It is important to track monthly costs, including savings for your future. You want to make sure your monthly mortgage still allows enough budget for everything else in life. We see many people end up “house-poor” at a young age, and household debt can begin to skyrocket. When it comes time to budget, allow approximately 28% of your income on a home. This starts with the mortgage, but includes all the costs to owning a home, like insurance and make sure you put aside some additional monthly budget for ongoing home maintenance.
2. Lock in your rate. Mortgage rates are always changing, so it is important to lock in to your rate in case it goes up significantly.
3. Get your credit in check. Low credit score equals a higher mortgage rate. It can sometimes even disqualify you from purchasing a house. To avoid this, review your credit score on a regular basis to ensure there are no sudden surprises when you start the process of getting a mortgage.
4. Not shopping around. Just like cars, electronics and even clothes, everyone shops around before making a purchase. Why should a mortgage be any different? Compare different options, watch the mortgage rates and talk to your bank. There are benefits and weaknesses to each type of loan.
5. Not understanding the process. Some of the aspects that lenders look at are consecutive and secure employment or future plans for income, previous housing history (like paying your rent on time each month), and personal assets that could cover mortgage payments. All help provide the lender with the security that you are a sound borrower. Most of this information applies to first time homebuyers.
There is a lot of material and resources out there about mortgages, but in the end it comes down to having a plan and working towards being able to purchase a home. The Dave Team is here to help! We can hook you up with one of our recommended mortgage specialists to get you on your way. Give us a call at 250-723-7653!