There are numerous reasons why you should do as much research as possible when searching for a mortgage. Making just one oversight could potentially cost you thousands of dollars. Making a mistake in the process of securing your mortgage can throw you off track financially, which can make your experience as a homeowner a challenge. Most of these mistakes can be avoided by using smart lending and spending habits. Maintaining smart financial habits will go a long way in avoiding costly mortgage mistakes. Below are four costly mortgage mistakes you can avoid with financial literacy, research and planning:
- Misjudging How Much You Can Actually Afford:
One big mistake new homeowners make is not accounting for how much money you’ll spend on things like home improvement and insurance. Not accounting for these major costs will give you an inaccurate picture of how much you can actually afford. Before you start shopping around for mortgages, you should put together a budget that consists of all of the expenses that you’ll be responsible for. Getting caught off guard with emergency repairs could set you back on making mortgage payments on time. Making sure you have enough saved up well in advance of emergencies will help you make your payments on time every month.
- Ignoring Your Credit Score:
Checking your credit score should be one of the first things on your agenda when you decide to start shopping for a new home. The lower your credit score is, the lower your odds are of getting approved. If you’ve checked your credit score in a while, it definitely helps to do so before you start applying for a mortgage. If you find that after checking your credit score that you need to do some work to boost your score, it helps to do so a couple of months or so in advance of applying for a mortgage.
- Not Exploring All of Your Options When Seeking a Mortgage:
If you don’t do extensive research it’s hard to tell if you’re getting the best available deal. By shopping around you’ll be able to save a considerable amount of money. Pay special attention to interest rates and other fees. One of the biggest mistakes that you could make during this process is seeking just one mortgage quote. To make sure that you’re getting the best possible mortgage rate try to secure multiple quotes from as many sources as possible.
- Not Negotiating On Fees:
One thing that people often fail to realize when applying for a home loan is that the fees associated with applying for a mortgage are usually negotiable. When applying for a mortgage, you’ll find that you’ll encounter a variety of fees including application fees, sign up fees, broker fees and underwriting fees. Some of these fees can even be negotiated away entirely. Always remember to stay on the lookout for various mortgage fees and to bring them to the attention of the lender before signing an agreement. Doing so can save you more money than you think.