The home buying process is an intricate maze full of both success stories and pitfalls. What's especially difficult is figuring out its financing part. When dealing with a mortgage, you couldn't be too complacent and not invest your time and negotiate properly for the best one that suits you. Moreover, making one mortgage mistake can be the difference between getting approved for your loan application or not.
Here are nine of the most common mortgage blunders that buyers make. Make sure you think about how you could avoid them for you to have a pleasant and meaningful home buying experience.
Mistake #1: Not checking your credit score and reviewing your credit reports first
Even before you consider buying your own home, your first homework is to check and review your credit and make sure everything in your report is accurate. Checking your credit report firsthand could help you avoid any issues further down the process.
Review all three of your credit reports from the main credit bureaus, and if there are errors or any inaccurate information in your report, take the necessary steps to dispute them immediately.
If your credit score isn't in its best shape, you can consider these helpful measures to improve it. Ensuring that everything on your credit report is positive and accurate is the first step for you to have a swift and smooth loan approval process.
Mistake #2: Failing to get pre-approved
Not getting pre-approved is the most common mortgage mistake home buyers make. There's also a big difference between getting a pre-qualification letter and getting a pre-approval.
More than getting pre-qualified, where you can get an idea of what home you can afford and what your monthly payment will be, getting a mortgage pre-approval is a notch better. Getting pre-approved will provide you with a crucial guideline of what loan you can get, how much you can afford, and can also give you an accurate estimate of how much the bank will lend you. The lender will verify your credit and employment which will help you avoid potential issues that could prevent you from getting your dream home.
Mistake #3: Changing your job in the middle of the process
One popular mistake when buying a home is changing jobs while you’re in the process of receiving a mortgage loan. Job stability is very important when getting a home loan because mortgage companies greatly take into consideration the borrower’s job history when approving or denying. Changing your job could complicate the process since the mortgage lender will need to reevaluate the stability of your position and your capability to pay off your debt. Even if you’re moving into a higher position, it is best to ask your employer if you could start after your closing date.
Mistake #4: Applying for a new credit or taking on new debts
Another big mistake home buyers make is taking on new debts or applying for new credit. Making a big purchase while the mortgage loan process is ongoing could delay the closing. It could also mess up the borrower’s debt-to-income ratio, which could result in being denied a mortgage. Applying for new credit can hurt your credit score and increase your debt load. So if you’re eyeing a new car or an enormous flat-screen TV, it is best to buy it when the loan is already funded and closed.
Mistake #5: Not reading your documents thoroughly
Before signing your loan documents, it would really help if you read each page carefully and not be afraid to ask questions to your lender if there’s something you’re not confident with. Some loan and mortgage terminologies can be very technical or confusing, but it wouldn’t hurt to put on your nerdy cap and review your documents thoroughly to know the terms and inclusions.
Mistake #6: Not shopping around for the right mortgage product
Just like how you’d take time to compare and review other products before buying them, devoting time to do “mortgage rate shopping” can save you thousands of dollars in fees and interests later on. Take time to shop around and compare the prices and terms of loan products. You may be surprised to know that sometimes, even the one with the lowest interest rates may not be the best offer. Lower rates may have steep fees and other terms that may prove to be not desirable at all.
Likewise, don’t get intimidated by the mortgage transaction itself. Compare good and bad recommendations and reviews. Shop around for the best possible terms applicable to you, and decide which type of mortgage best suits your situation and capability.
Mistake #7: Failing to consider the true costs of homeownership
What many first-time homebuyers fail to realize is that there are other expenses associated with purchasing a home aside from the mortgage payment itself. Once you open the door and step into homeownership, other costs associated with it will come rushing in. You have to pay for property taxes, homeowners’ insurance, and HOA fees if applicable. You also have to allocate a budget for other necessary purchases, potential repairs and maintenance, and other incidentals.
Mistake #8: Failing to lock in your mortgage rate
In completing a mortgage application, buyers also have to decide whether they’d like to float or lock their mortgage rate. Not locking in your mortgage rate is a big risk since interests are expected to rise every quarter of the year. The 2018 Mortgage Rate Forecast of the Mortgage Bankers Association suggests the first quarter will have a 4.3% interest rate and will rise to 4.8% by the last quarter. If you decide to buy a home, take advantage of the current lower rates and be sure to lock in your mortgage rate. Also, it is best to closely monitor the interest rates before and during the closing process.
Mistake #9: Not keeping your mortgage loan simple
Keeping your mortgage loan simple could be your best option if you want a less stressful process. Despite the many unique loan packages available out there, many of them come with complications and terms that may pose more restrictions. Some mortgage options even have superficial collections or charge-offs that could affect your credit score. It’s better to choose a conventional mortgage package, such as FHA loans, or have a standard alternative loan like VA loans if it’s applicable. Likewise, don’t be afraid to always consult with your top real estate agent about your financial needs and about the whole mortgage process.
Dear
- you're in great hands -
Meet
Proven Track Record
Service
Knowledge
Integrity
An MAI of 30 is typically balanced; over 30 is a seller's market, under 30 is a buyer's market.
Buyer markets
Seller markets
View current market trends
Processes
1
Consultation
2
Pre-Approval
3
Property tours
4
Write offer
5
Under Contract or Escrow
6
Appraisal
7
Inspections
8
Closing
Unique Value I Provide My Clients
Professional Network
Price Range
Beds & Baths
Property Types
Raving Reviews
Review has been shortened using AI, click the review to read the full review.
Review has been shortened using AI.
Loyalty
Reviewing each others roles and responsibilities as we embark on the next steps of your home-buying journey is how we can decide if we are ready to be loyal to one another.
105 More Ways
Agents Who Are Realtors ® Are Worth Every Penny Of Their Compensation.
Counseling Session Activities
- Prepare the buyer for executing a buyer representation agreement
- Explain agency relationships to the buyer and get state required legal consent to represent, if needed
- Inform the buyer of working relationship based on state law, the REALTORS® Code of Ethics, and the broker’s business policies
Building a Relationship
- Learn the buyer’s wants and non-negotiable needs
- Understand the buyer’s budget and what will be needed financially
- Help the buyer understand what property their chosen budget will buy
- Consider having the buyer fill out a homebuyer’s checklist
- Assist the buyer in examining how much they can afford to spend
- Provide quality lender resources
- Partner with the buyer to locate suitable properties for consideration
- Match the buyer’s needs with available property
- Constantly re-evaluate buyer’s needs and refocus property showings to fit those needs
- After ensuring the buyer understands what is done for them, how it is done,and the benefit to them, obtain signatures on the buyer representation agreement
- Explain how compensation is paid, who pays it, and what the buyer’s options are for paying it
Educating the Buyer
- Communicate the working relationship based on state law, the REALTORS® Code of Ethics, and the broker’s business policies
- Explain Federal and State Fair Housing laws
- Explain what to look for in applicable property disclosures
- Reassure the buyer that their personal information will remain confidential
- Inform the buyer that you will always disclose all known material defects
- In accordance with state law, provide information on checking the sex-offender registry and crime statistics for the neighborhood
- Discuss available resources that the buyer can check to learn more about prospective neighborhoods
Preparing the Buyer
- Explain the timeline for house hunting, mortgage approval, and closing
- Explain the local market and how it impacts the buyer
- Show statistics on what percentage of list price sellers in the area are currentlyreceiving
- Inform the buyer on what home features are popular
- Identify current average days on market
- Share the dangers of using the price per square foot to figure home values
- Explain the concept of absorption rate and how it impacts the buying process
- Indicate current listing months of market inventory
- Share estimated potential out-of-pocket costs to complete the transaction
- Assist the buyer in analyzing the loan estimates
- Qualify the buyer for financial ability to purchase
- Help the buyer account for the complete costs of homeownership
- Prepare lender for listing agent calls
- Assist in comparing different financing options
- Help the buyer select for viewing only those homes that fit their needs
- Proceed in showing homes that fit the buyer’s must-haves
- Caution the buyer on posting information to social media
- Review the sample sales contract so the buyer is prepared when it comes time to make an offer
Showing Properties
- Schedule showings and provide access to all listed properties as soon as they become available in their local MLS broker marketplaces
- Educate the buyer on the immediacy of new listings appearing in their local MLS broker marketplaces and the lag time for them to appear on some websites
- Collaborate with the buyer on properties they may have learned about through their sphere contacts
- Research and assist on all unlisted properties the buyer wishes to see
- Preview properties prior to showing if needed
- Network with other agents to source properties not yet in their local MLS broker marketplaces
- Contact homeowners in focus areas to see if they are considering selling
- Set up an automated email alert system through their local MLS broker marketplaces that immediately notifies the buyer of properties that fit discussed requirements
- Arrange a tour of areas, schools, and key points of interest
- Provide resources containing neighborhood information on municipal services,schools, etc.
- Inform the buyer of negative aspects like nearby venues or operations that may result in issues that could impact value
- Collect and share any other vital information on available homes, remembering to follow all fair housing laws at all times
- Check applicable zoning and building restrictions
- Help the buyer decipher public property and tax information
- Collect and share pertinent data on values, taxes, utility costs, etc.
- Compare each property shown to the buyer’s wants and needs list and remind them of what they were looking for
- Help the buyer narrow the search until the buyer identifies top choices
Negotiating Offers
- Assist the buyer in getting the best property at the best price
- Suggest that the buyer learn more about the neighborhood prior to makingan offer
- Prepare a comparative market analysis (CMA) in advance of making an offer
- Prepare the buyer to have the most attractive offer in the current marketplace
- Explain common contract contingencies and include approved protective clauses in the purchase offer
- Ensure that the buyer receives and understands all state and federally-required disclosure forms
- Prioritize contract negotiation goals with the buyer
- Help create a negotiating strategy
- Use strategies such as an escalation clause to maintain a competitive offer
- Prepare the buyer for a multiple offer situation and develop negotiation strategies
- Write an offer that has a reasonable chance of being accepted
- Recommend optional contingencies and explain the pros and cons of using them
- Provide information on purchasing incentives that may be available
- Discuss financing alternatives
- Negotiate the buyer’s offers to arrive at the best price and terms
- Utilize hyperlocal expertise and strong communication skills to assist the buyer in being the successful offer
Buyer Specialist
Let's Chat.
I look forward to working with you.
Thank you!
This is only the beginning of an exciting journey to a bright and shining new future. And it's only the beginning of our commitment to servicing your every real estate need. Thank you for the opportunity to help you find your perfect home!
Starting August 17th, 2024
By Signing the Agreement to Partner with an Agent
