Now is a great time to buy a home. The market has lots of homes to choose from and mortgage rates are still hovering around 4 percent. But before you make one of the largest purchases of your life, we’ve put together a few mortgage tips for first-time homebuyers.
Here are five common mortgage loan mistakes to avoid:
1. Switching employment before closing the deal.
Getting approved for a mortgage requires that you demonstrate you have the ability to pay back the amount you borrow. Proving stable employment is a key factor to that process. A steady income and job stability over time will help to show you are able to repay a loan. Job hopping will not help — it’s better to show consistency than be viewed as unpredictable. Changing jobs in the same career field will likely hurt less, but repeatedly changing direction could prevent closing on a mortgage. To ensure a smooth mortgage qualification process, stay put.
2. Buying first, asking questions later.
Don’t be afraid to shop around — there are lots of homes available. While looking, be patient and picky. Deals come and go all the time. Home prices change dramatically across seasons. Committing too soon may wind up costing you more in the long run.
3. Not reading the fine print.
Homebuyers sometimes neglect to read the mortgage terms of agreement and then have concerns later when the rules kick in. Be sure to consult with an expert about the terms and requirements of your mortgage. At Washington Federal, we’re happy to help answer any mortgage questions you may have. Treat the loan application process like a doctor’s appointment and ask away!
4. Applying for credit while you’re applying for your mortgage.
If you’re applying for a mortgage, the last thing you’ll want is to be viewed as a credit risk. In general, it’s best to avoid applying for new credit during the mortgage process. A new credit card or car loan could hurt your chances of receiving the amount of money that you need to buy your dream home.
5. Spending too much on a down payment.
When applying for a conventional mortgage, homebuyers who put 20 percent or more down can avoid paying for mortgage insurance. However, it might not be worth spending your entire bank account in hopes of avoiding this extra cost. Your lender may require you to have funds in reserve to cover unforeseen expenses or home repairs. It’s important to plan for the unexpected so you’re not stuck living paycheck to paycheck.
While buying a home is one of the biggest financial decisions you will ever make, you can feel confident making it with Washington Federal—a trusted lender since 1917. Contact us for more mortgage information.