Opinion: ways a buyer mess up when getting a mortgage, by Norman Green.

By Norman Green

Ways a Buyer Mess Up When Getting a Mortgage

Getting a mortgage is a popular step most first-time homebuyers take when purchasing their homes. Yet, it’s the most dangerous, complicated, and stressful process. Most homebuyers attest to how difficult getting a mortgage is, and some lenders aren’t even trying to simplify the process.

However, some first-time homebuyers do make mistakes in the process because they fail to make proper research. Many things can go wrong when trying to get a mortgage, and if you are not vigilant, you could fall into a massive trap.

Here are some of the ways a buyer mess up when getting a mortgage.

Ways a Buyer Mess Up When Getting a Mortgage

WAITING TO HAVE YOUR 20% DOWN PAYMENT COMPLETE

Making a 20% down payment is a conventional rule when one is applying for a mortgage. You must have heard it from lenders, bankers, and even read it all up on real estate sites. Making a 20% down payment is beneficial because it prevents you from paying additional monthly fees, also known as Private Mortgage Insurance.

Considering the current mortgage rate and the relatively stable economy, waiting for the golden 20% might not just be ideal anymore. This is because the more the clock ticks, the higher the mortgage rate could go. Not forgetting that home prices could also go up.

In essence, you shouldn’t wait to get a 20% down payment before applying for a house loan. Instead, it would be best if you discussed with your lender to know a flexible figure to deposit. You should ensure that the figure doesn’t affect your finances or your salary.

NEGOTIATING WITH ONE LENDER

Negotiating with one lender when trying to apply for a mortgage is a fatal error. You could be missing out on other big deals from other lenders that you might have gotten if you hadn’t stopped with just one lender.

Mortgage lenders have varying interest rates and incredible offers that can save you a huge deal in the long run. You might be surprised to see some of these rates be way lower than expected.

So, don’t stop at negotiating with just one lender. Meet two to three others and make sure you are getting the best offer. Start searching for lenders at least three months before you start your search for a home.

NOT KNOWING THE DIFFERENCE BETWEEN PREQUALIFIED AND PRE-APPROVED

A lot of first-time homebuyers think this is the same, but it isn’t. To be pre-qualified means that the lender has agreed to check all the information presented to them, such as your income, credit score, assets, etc. After that, you will let the lender know the amount you want. There’s no guarantee that you will get the money, though.

After the pre-qualification is the pre-approval. The lender will crosscheck your credit, income, and assets. After verification, the lender will sign you a letter committing to finance your home.

When looking for a mortgage, being pre-approved is the real deal and not pre-qualified.

SHIFTING YOUR MONEY AROUND

This is the last thing you want to do because it’s would be a red flag on your part. The lender would want to check if your finances have remained stable over a few months to a year, so moving money around shows that you want to cover up something. Don’t be surprised if you get turned down.

You should also avoid applying for new credit because your credit score will undergo some scrutiny. Doing this will make the lender think you are desperate. We advise that you stay put and avoid applying for any new credit.

CONCLUSION

Applying for a mortgage loan isn’t the easiest process. However, you need to do your part to avoid long processes and so much paperwork. Don’t apply for new credit; shift money around; meet with one lender, and wait till you have your 20% down payment.

Visit The Power Is Now Media, Inc. and read/watch more real estate and mortgage news, videos, and information on current developments in the real estate industry on Facebook Live and our YouTube channel. The Power Is Now Media, Inc. is leading the conversation in real estate.

The Power Is Now Media is an online multimedia company founded in 2009 by Eric L. Frazier, MBA, and is headquartered in Riverside, California. We are advocates for homeownership, wealth building, and financial literacy for low to moderate-income and minority communities. The Power Is Now Media corporate office is located at 3739 6th Street Riverside, CA 92501. Ph: 800-401-8994 Website: www.thepowerisnow.com.

References

https://www.nerdwallet.com/article/mortgages/first-time-home-buyer-mistakesthat-are-easy-to-avoid https://www.google.com/amp/s/www.realtor.com/advice/finance/ways-homebuyers-mess-up-mortgage/amp/ https://www.google.com/amp/s/www.bankrate.com/mortgages/avoid-mortgageclosing-missteps/amp/ https://themortgagereports.com/255/how-to-unapprove-your-mortgageapproval-in-process

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