Purchasing your first home is an incredibly exciting experience. So much so, that sometimes you can get swept up in the rush and make some very detrimental mistakes. It’s important to slow down and really pay attention to what’s going on around you. At Source Mortgage we feel that the more knowledge you have, the better equipped you are to make an informed decision and avoid buyer’s remorse. In this article we are going to look at five of the most common mortgage mistakes we see with first time homebuyers so that you can avoid them in your own journey!
Shopping for a house before getting pre-approved.
While looking for a home is undeniably the most exciting part of the process, resist the urge to look before you’re pre-approved. If you put an offer on a home without pre-approval, expect that the seller will look at everyone else’s applications before yours. You also risk falling for a home you absolutely can’t afford.
Obsessing over the “perfect” home.
The chance that you will find a home that checks all of your boxes is slim to none. The reality is that the search for perfection will narrow down your choices to a point that nothing will make you happy. Prioritize your list of must-haves and recognize that no one property may fulfill everything you’re looking for. If you still really want that dream kitchen, you can always choose a mortgage with purchase plus improvements and just build it later!
Overspending and becoming house-poor.
Purchasing a home is an expensive venture any way you slice it. However, cutting yourself too short can leave you living paycheque to paycheque without an emergency fund. In these cases, you risk losing your home if anything ever happened. To avoid the financial strain, put less money down and aim to have at least three months of living expenses set aside just in case.
Stretching credit before closing.
Sure you’ve got great credit when you first apply for a mortgage, but that’s not the only time your lender is going to check your report. Just before closing, expect them to pull a credit report to ensure that everything still looks good financially. Many first time homebuyers think they are off the hook after the initial check and get lax on their credit. This can be a tough lesson to learn after all that hard work!
Getting a quote from a single lender.
You don’t have to be a hardcore bargain hunter to understand the value of shopping around. Many homebuyers make the mistake of signing with the first lender they talk to. Instead, shop around and get quotes from at least three lenders, that way you have a basis for comparison. For those who don’t want to pay an application fee each time (and who does?), choose to work with a mortgage broker. With a broker you can send out multiple applications while only paying a single fee.
Homebuying isn’t always an easy process, but there are ways to help smooth it out. Keep these five common mistakes in mind when starting your mortgage journey. Looking for more expert advice from our team of mortgage brokers? Contact us here.