It is finally time to buy your dream home. That is so exciting! You can already see yourself lounging in the living room or cooking your favorite meals in your ideal kitchen, right?
Before you start to plan your home’s decor, you need to be aware of some of the biggest mistakes when purchasing a home for the first time to avoid stress down the line.
Asking Someone to Cosign Your Mortgage
Asking someone to cosign on your mortgage is one of the biggest mistakes when purchasing a home. Cosigning a loan can ruin your credit score and damage relationships. We recommend you never cosign anything.
If you’re at a point where you need a cosigner, it would be better to wait until you can afford a home on your own, and that is okay. Be patient and create a plan to get there. You will thank yourself for protecting your financial future.
Adding Credit While Closing on a House
Purchasing a home while in debt is not ideal, but adding new debt while buying a home is worse. Obtaining another loan or new credit card charges will change your credit score and delay closing.
Save yourself time and trouble by maintaining your finances from preapproval to closing. Do not purchase items that could change your credit score, and be honest with your lender about your financial obligations.
Skipping Mortgage Preapproval
When applying for a mortgage, lenders will not hand you the money right away; there is an approval process that you should start before shopping for your new home.
You might be wondering why, but imagine finding the perfect house and immediately visiting a lender to apply for a mortgage. By the time you start the application process, you find out it’s too late because the seller sold the house to someone who had a preapproval letter.
A mortgage preapproval letter tells the seller that you are serious and qualified to buy. Getting preapproved will speed up the paperwork process and give you the upper hand.
Making a Small Down Payment
Most loan companies encourage first-time homebuyers to consider mortgages that require little down payment. As sweet as that sounds, you will pay thousands in extra interest and fees.
Find a lender that has your best interest in mind and build a relationship with them so they can meet your needs and steer you in the right direction.
You should save at least 10 to 20 percent of the home’s total cost for your down payment. Even though it means waiting a little longer, you will save a lot of money long term.
Taking extra precautions when buying a home can save you thousands of dollars and many sleepless nights. Take your time when purchasing a home to ensure a safe financial future.