For first-time home buyers and seasoned pros, going into a mortgage process can feel a little daunting at times. Questions start to swirl in your brain like how does my credit affect the mortgage I can qualify for, how does the home I chose impact the mortgage and how do you compare one mortgage lender’s quote to another.
How much do you qualify for?
The #️1️⃣ mistake homebuyers make when it comes to buying a home is not understanding their credit score and what is included in their credit report. Since credit is such a key component in being able to qualify for a mortgage and determining how much of a mortgage you can afford, knowing what you don’t know can have a huge impact on your home buying plans.
There are multiple versions of credit scores. But when you get a mortgage, lenders use FICO (aka your mortgage scores)
There are three primary credit bureaus – Experian, Equifax and TransUnion. In addition, there are dozens of websites where you can check your score, which can use different formulas to determine your score so it can be wildly off from what the credit bureaus report.
So, unless you know the right scores with enough time to make any changes if needed, you’re missing a big piece of the puzzle.
This is when it pays – literally – to work with a mortgage lender even before you start home shopping.
The home you chose could get your home loan denied
You’ve done your work. You’ve found your dream home. But, there’s something most buyers don’t think about when they are house hunting. And making this mistake could cost you thousands or even get your loan denied.
When you’re preapproved for a loan, you’re actually not approved for a sales price, you’re preapproved for a payment.
Choosing a home with high property taxes or a house that will be expensive to get insurance on or even one with homeowner association dues higher than estimated could increase your monthly payment so high to jeopardize your loan.
My advice is check with your lender before making an offer to double check that the numbers still work and follow to learn more homebuying tips that save you money.
How to compare quotes
One of the most confusing things about getting a mortgage is knowing if you’re getting a good deal on your rate and fees.
It’s always a good idea to get at least two quotes. But once you do, how do you compare when closing cost worksheets can be formatted differently and fees have different names?
To get a start on what could be included, this mortgage comparison guide can help you understand what can be required for a mortgage and what is included.
If you want a second quote to compare, or just interested in talking about your mortgage options, reach out. I’m here to help.