The Most Common Mortgage Mistakes First-Time Buyers Make

The housing market can be extremely complex and challenging for a lot of people, particularly those who do not have a lot of experience with it. It is prone to all kinds of changes, which can be difficult to keep up with.

There’s nothing wrong with being unfamiliar with certain things; however, bear in mind that since acquiring a home isn’t a small purchase, in fact, it’s probably the biggest one you’ll ever make, you cannot allow yourself to make a massive mistake that will result in irreparable damage.

But don’t fret! This informative guide is not here to scare you, but to help you out! That’s precisely why it concentrated on the most common first-time buyer mistakes to help you avoid them effectively! So, let’s dive into this a bit more!

Do Not Overlook A Mortgage Agreement In Principle

Before you even begin your hunt for a future house, it would be recommended to first have a mortgage agreement in principle from a lender. This agreement is also known as a “mortgage promise,” and it basically represents a certificate that demonstrates the amount of money the lender is going to lend you.

This document is usually valid for approximately three months (more or less), and if you haven’t heard of it in the past, then just be sure to browse the web, because many sites are packed with useful information as far as this is concerned.

Speaking of this, what you need to understand is that a mortgage agreement in principle isn’t the same as the real mortgage offer, nor is it any form of guarantee that you will borrow the amount of money that’s seen on the contract.

Its whole purpose is to show you the amount of money that’s at your disposal and the type of properties you should take into account based on your budget. Besides that, it gives the real estate agents peace of mind and reassurance that you are truly serious about this whole purchase, and that you have the means for it.

Being Negligent When It Comes To The Newest Mortgage Interest Rates

Here’s another very common mistake that you do not want to make on this journey. Now, you are probably wondering why it is so essential to track the latest mortgage special interest rates when buying a house. It’s pivotal because these rates affect the cost of purchasing a home, and, simultaneously, they affect your monthly payments and the sum of money you’ll need to set aside for the loan.

In addition, fluctuating rates can influence affordability, too, and sometimes, they can even result in a delay or prevent property purchase. Therefore, it doesn’t matter whether you’re a first-time buyer or not; if you want to make sure you are having a very low rate, then you should definitely pay close attention to this.

Don’t ever forget that the mortgage interest rates change practically every day (weekends are the only exception) due to numerous factors. Although these changes aren’t that drastic (referring to those that occur daily), it still doesn’t mean that you’re supposed to overlook them!

Do Not Make Any Purchases On Credit

Until the house that piqued your interest is one hundred percent yours, you shouldn’t apply for any credit or make any major purchases on credit. How come? Well, that’s because the vast majority of lenders are very focused on the credit scores of their clients, along with the debt-to-income ratio, when they need to decide whether they will lend money or not. 

Consequently, if they conclude that you’ve recently added a debt, or that your credit score has changed (not in a good way), they may decline your application, which surely isn’t something that you want, right?

At times, they may also rescind their offer. That’s why, until you have the keys to your home in your hands, do not open any credit accounts; otherwise, there’s a chance you will regret taking these steps.

Choosing The Right Neighborhood Is Extremely Important

Everyone dreams of having a perfect home that looks exactly like they’ve imagined their entire lives, and that checks off all the crucial things. It’s completely understandable if a certain property swept you off your feet in terms of its appearance; however, if the neighborhood this house is situated in isn’t good, then you should definitely cross this house off your list.

Do you really think that you’ll be able to fully enjoy this space if you despise the neighborhood? It’s highly unlikely! If you want to make sure you are truly satisfied with the area you’ll be living in, then you should roll up your sleeves and do the homework first.

Get as much useful information as possible about the schools in that area (if you have children, of course), the proximity to the most important places, including your work, and most importantly, their safety! 

If there’s a certain neighborhood that you’re interested in, it wouldn’t hurt to visit it first just to get the sense of how everything functions out there and if that area is really capable of meeting your needs and preferences.

Are You In Debt?

Yes, you are probably very impatient and you want to buy a house as soon as possible; however, if you are currently in debt, then this most certainly isn’t a good idea. In fact, it could be detrimental to your current financial situation.

Debt isn’t something you want to mess up with. You know how burdening it is to have a debt, yet you want to add another financial obligation to this already difficult financial situation. You’ll only add more issues to your life.

Something like this will practically force you to take out a larger mortgage to accelerate this whole process, or you will take eternity to save a down payment, or you may not even be able to make your mortgage payments because of your debt. Do you see how suddenly things will become complicated?

You are probably very thrilled right now because of the upcoming purchase, and you most likely already pictured yourself in it. That’s undoubtedly great! However, if you want this journey to be smooth, then you must do whatever you can to avoid making these aforementioned mistakes!