There is always a lot of excitement involved in buying your first home. This excitement is what carries first time home buyers away, causing them to ignore some of the most important details and they end up making costly mistakes. A lot of people rush through the transaction without even taking time to think of the factors that surround their financial situation or the mortgage itself. This might be dangerous to you in the end. That is why you need to focus on certain issues when preparing to buy your first home to avoid making these mistakes. Some of the mistakes to avoid include:
- Ignoring your credit status: your credit status is the very first thing your mortgage lender will check out in order to determine how they are going to lend you the money. It is therefore very important to check your credit. If it is not a good score, you should work to make it better so as to get a mortgage with better terms and interests rates. Keep in mind that you will probably be paying back your mortgage for five years or more, so the better the rate, the more you can save. Fortunately, there are financial advisors who can help you increase your credit score just before you apply for a mortgage to avoid paying heavy charges for the loan in the end. Check your credit score
- Getting into more debt soon after acquiring a mortgage: what a new loan will do is to lower your credit score even further. This will not be good to you because it might affect your mortgage repayment rates. Improve your credit score
- Avoiding mortgage pre-approval: what many first home buyers do is to wait until they find their dream home to get a mortgage pre-approval. They do not realize that the pre-approval is very significant as it helps one determine whether they meet the criteria to qualify for the mortgage. It is good to do this beforehand, and then you will easily get the money once you have a home in mind.
- Not preparing your assets: potential lenders would love to see your liquid cash to determine whether you qualify for the loan you are applying for or not. Failing to prepare your assets on time may deny you a chance to get a good mortgage on time. You might also end up with an expensive mortgage.
- Job hopping: shifting from one job to the other is not a smart thing when you are looking for a home loan. This is because it shows how inconsistent and unstable your income is. Home loan lenders want to be sure that you will be able to repay back the loan as per the signed agreement, which may not be possible when your income is unstable.
- Not shopping widely for mortgage facilities: many first time buyers do not spend enough time shopping around for the most ideal and most reliable credit facilities. They are usually in a rush to get a loan, and they make so many mistakes in the end. For a good loan, you need to spare some time to shop for the best, trustworthy and reliable lender. Compare the rates too, so as not to end up paying more charges than you should.
- Ignoring the mortgage document: the terms of the mortgage agreement are written in the mortgage document, which is why you need to go through it carefully and be in agreement with it before you sign it. Ignoring such a document may bring unexpected surprises later on when you start paying back the loan.