Top Three Mistakes Homebuyers Should Avoid
Ignoring these Common Oversights can Cost Unsuspecting Homebuyers
Nov 7, 2009
Navigating through the home-buying process is tricky enough. But, staying clear of these
potentially costly pitfalls will help ensure a smooth homebuying transaction.
Making the commitment to stop being a renter and become a homeowner is one of the most important and life-changing decisions a person can make. In lieu of this fact, real estate professionals agree that there are certain ways to greatly enhance one's application when applying for a home mortgage loan. First-time prospective homebuyers, in particular, often overlook these potential traps. In fact, doing so can easily make the difference in being approved for that dream house or going back to square one.
Avoid these Mortage Loan Hazards at all Costs
- Failing to Become Prequalified before Making an Offer on a HomeNeglecting to obtain a prequalification letter prior to making an offer to a home seller is a rather unsound decision on the potential homebuyer's part. In fact, it's a definite sign that the homebuyer is going into the home buying process totally unprepared. As a result, it's vitally important to get one's financiing issues squared away early. This provides the opportunity to examine - and to correct, if need be - any fallacies contained in one's credit report. These concerns can include identity theft issues, bill paying patterns, possible former residence discrepancies,, bankruptcy issues, credit account discharge dates, or erroneous information regarding one's work history. In addition, some mortgage lenders may use a different method to calculate income than the one used by the homebuyer, especially for the self-employed. Indeed, taking the responsible step to become prequalified gives the homebuyer time to iron out any potentially detrimental issues before getting down to the latter stages of the home loan process. Lastly, it can save valuable time, and perhaps, help to avoid losing out on that dream house.
- Financing Another VehicleNew Homebuyers need to realize that the morgage loan preapproval process is based largely on the borrower's debt-to-income ratio. The lower the ratio, the better the credit risk the borrower is to the mortgage lender. As a general rule-of-thumb, lenders don't like to approve a mortgage if an applicant's debt-to-income ratio exceed 36%. If, for example, the borrower incurs major extra debt shortly after being preapproved - normally the case when purchasing a new or late-model vehicle - the debt-to-income ratio established at the time of preapproval becomes invalid. Thus, a new one has to be recalculated, resulting in a higher ratio. And, the mortgage amount the borrower was originally approved for will, most likely, be decreased. Real estate experts agree that it's much better to hold off on big-ticket item purchases, such as cars or boats, until after the mortgage loan is finalized. It can result in much more favorable lending conditions for the homebuyer - including a nice, low interest rate.
- Neglecting to Hire a Real Estate AgentThere's no doubt that today's real estate transactions have become more and more complicated. Just consider the plethora of legal documents one must read, understand and sign during the home buying process - not to mention the mound of documentation required by the mortgage lender for income verification, legal status, and other purposes. Thus, enter the real estate professional. Through increased training requirements, the need to keep abreast of ever-changing laws, and increased competition from other potential buyers' agents, today's real estate professionals have to be well-versed in the intricacies of real estate transactions. Likewise, a knowledgeable real estate agent who's well-acquainted with the local market will also be able to recommend the best sources of financing, qualified home inspectors, and of course, the best homes for the homebuyer's circumstances. Certainly, one could even say that hiring a qualifed real estate professional has become an outright necessity in order to make the home buying ordeal much less stressful.
The copyright of the article Top Three Mistakes Homebuyers Should Avoid in Home Mortgages is owned by Brian Roush. Permission to republish Top Three Mistakes Homebuyers Should Avoid in print or online must be granted by the author in writing.
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