1. Looking for a home before applying for a mortgage
Many first-time buyers make the mistake of viewing homes before ever speaking with a mortgage lender. This puts you behind the ball if a home hits the market you love, or you look at homes that you can’t afford. This is why we created the Loan to Home Team to help you not skip a step from start to finish.

In this market, housing inventory is still tight and competition is fierce. You will need a pre approval letter to offer the seller before they will consider your offer. Better to have it handy before you even start looking at homes. 

2. Being careless with credit
Lenders pull credit reports at pre approval to make sure things check out and again just before closing. They want to make sure nothing has changed in your financial picture. Any new loans or credit card accounts on your credit report can jeopardize the closing. Buyers, especially first-timers, often learn this lesson the hard way.

The goal: keep the status quo in your finances from pre approval to closing. Otherwise, you could lower your credit score, run up your debt-to-income ratio and imperil your final loan approval.

What to do instead: Don’t open new credit cards, close existing accounts, take out new loans or make large purchases on existing credit accounts in the months leading up to applying for a mortgage through closing day. Pay down your existing balances to below 30% of your available credit limit, and pay your bills on time and in full every month.

3. Assuming you need a 20% down payment
The long-held belief that you must put 20% down payment is a myth. While a 20% down payment does help you avoid paying private mortgage insurance, many buyers today don’t want (or can’t) put down that much money. In fact, the median down payment on a home is 13%, according to the National Association of Realtors.

Delaying your home purchase to save up 20% could take years, and you could limit cash flow that could be put to better use maximizing your retirement savings, adding to your emergency fund or paying down high-interest debt.

What to do instead: You can put as little as 3% down for a conventional mortgage (note: you’ll pay mortgage insurance). Some government-insured loans require 3.5% down or zero down, call us today to find out more. 

 

Information provided by Tribune Content Agency, LLC and the Florida Realtors Association