Common mortgage mistakes
4 first-time homebuyers' mortgage mistakes—and how to avoid them
You're getting ready to buy your first home—it's an exciting time! But it may also feel somewhat overwhelming. After all, a home is one of the single biggest purchases you'll ever make. And you don't want to make any mortgage mistakes that might keep you from getting into your perfect home.
So before you start looking at "for sale" signs, become a savvier homebuyer by understanding how to avoid these common mistakes.
Home shopping before you're pre-qualified for a loan.
The first question every realtor is going to ask is, "Have you been pre-qualified?" Before you start checking out homes, visit with your lender to receive your pre-qualification, which will give you an idea of how much house you can really afford and what a lender might be willing to loan to you.
Get pre-qualified for a loan from a lender.
To receive your pre-qualification information, set up an appointment with your local KeyBank mortgage loan officer, who will ask you questions to determine what you pre-qualify for.
Planning to purchase as much home as you can afford.
Even if you're pre-qualified for a $350,000 mortgage, that doesn't mean you have to spend that much on a home. Start adding up the costs to see what's really manageable with your budget. And remember, you'll also need to factor in extra funds for home repairs and other expenses that may come up as you're moving into your new home.
Less is more.
Look through your finances carefully to evaluate how much you can afford. Remember that even if you qualify for a certain amount of home loan, you may want to spend less.
Budgeting your monthly mortgage payment just on the home price.
Your monthly mortgage will include more than just what you're paying to buy the home (that amount includes the principal and interest). The other monthly payments can add up significantly and include property insurance, property taxes and any homeowners' association dues, if they have those in the neighborhood where you buy.
Don't forget about other costs.
Work with your mortgage loan officer to figure out your estimated monthly mortgage payments, which include not just your home loan payment but also property taxes, homeowner's insurance and potentially other costs. Remember, property taxes tend to go up each year, so you'll need to budget for that increase annually.
Not looking at your credit score before applying for a mortgage.
This is a big one! Do you know your credit score? When you apply for pre-qualification, the lender will request your credit score from the 3 major credit reporting agencies: Experian,® Equifax® and TransUnion.® These agencies determine your score based on your history of making on-time financial payments, along with your debt habits.
Check your credit score.
Request your credit score from each of the 3 major credit reporting agencies. These reports aren't foolproof, so review them carefully to make sure they're accurate. You can also allow your mortgage loan officer to check the score as part of the pre-qualification process.