Mistake #1: Looking for a home before applying for a mortgage.
In this super competitive market, Buyer’s offers are NOT even considered without a mortgage Pre Qualification. PreApprovals are much better than PreQualification, especially in competitive situations (there is a difference). Sellers won’t entertain offers with financing risks as it takes the home off the market for the seller.
Mistake #2: Purchasing a home that is over budget.
Although it may be tempting -especially when it feels like they have finally found the perfect home -it is never a good idea for borrowers to overextend themselves. Not only will it add more day-to-day financial stress, but it also puts buyers at risk for foreclosure if their financial situation suddenly changes. Borrowers can avoid this common mistake by focusing on the amount of monthly payment they can afford, rather than the maximum amount of loan they qualify for. Also, don’t deplete savings, as there are typically some remodel, repair and renovation costs that new homeowners incur after move in.
Note: In Florida, make sure that the taxes for subsequent years are estimated for more accurate future payments. With the Save Our Homes Cap on Homesteaded properties, the tax obligation on a property may increase significantly with it’s sale, adding a substantial cost to future monthly expenses. Have your REALTOR® provide you with a future tax estimate so there aren’t any surprises. This is true also for new construction.
Mistake #3: Being careless with your credit.
Many borrowers make the mistake of taking on new loans or credit cards after their initial preApproval, which can greatly jeopardize closing and final loan approval. Lenders will do a final credit check just prior to closing and any changes to your credit provile could impact your ability to close or the final terms of your loan.
Borrowers can avoid this by NOT opening new credit card accounts, NOT closing existing accounts, or NOT taking out new loans in the period leading up to applying for a mortgage through closing day. If possible, borrowers should spend their time paying down their existing balances to below 30% of their available credit limit and continue paying all monthly bills on time.
