With the spring market just around the corner, home shopping season is nearly upon us! While it might seem like there’s nothing to do but hurry up and wait, getting prepared early is one of the best moves you can make. Want to know a great place to start? Your mortgage! In today’s post, we’re here to give you tips on how to avoid mortgage misunderstandings like the 5 below as well as how to get the best rate and keep it!
1. “I don’t need a pre-approval to house shop.”
Starting to shop for a home without a pre-approval is like trying to drive your car without your keys – it gets you nowhere! In our area, an offer without a pre-approval (or proof of funds if you’re going cash) won’t be considered as a serious offer. While you can get your pre-approval after you find your dream home, in the world of multiple-offer bidding wars, there’s a chance you won’t have time to start the process and get your offer in in time, a situation you definitely want to avoid!
2. “Once I’m pre-approved, my credit score doesn’t matter.”
Once you’re pre-approved, you don’t have to think about your credit score and trying to improve it anymore, right? Actually, it could be worth your while! A higher credit score means lower payments, saving you both monthly and over the life of the loan!
3. “Once I have my pre-approval, I can stop looking for a mortgage.”
You’ve got your pre-approval – great! While going with your first lender off the bat can save you time, it doesn’t always save you money. Not all lenders are created equal, so be sure to shop around before finalizing your decision. Our tip? Ask your agent for their go-to loan officer – It pays to know the lender you’re working with can get the deal done!
4. “My home’s total monthly cost is my mortgage payment.”
Once you have your pre-approval, you may think you know your monthly payment, but there’s more to know! You need to include property taxes, homeowner’s insurance, and if you’re in a development or condo, you’ll need to include association fees as well. Be sure to add these factors in so that you’re not pricing yourself out of your budget!
5. “I don’t need to put 20% down on my home.”
Let’s be clear – you’re 100% right on this one and you don’t need to put 20% down. For plenty of buyers, this is great! That said, if you can afford 20%, you’ll want to speak to your lender before deciding one way or another – if you choose a downpayment below 20%, you’ll probably be paying a little extra in other places, like private mortgage insurance (PMI), and you could end up with a higher interest rate as well.
Have questions about buying or selling a home? Get in touch today.
