Top 3 Mistakes to Avoid When Taking a Mortgage Loan
Mortgage loans are a popular route people take for home ownership. According to Home Buyers, 81% of home buyers took 30-year mortgages. However, many people make costly mistakes because they don’t have sufficient information from the start. Learn three common mortgage mistakes people make and how you can avoid them.
Mistake #1: Not Shopping Around for the Best Mortgage Rates
A standard error people make when taking a mortgage is taking the first offer they receive. It’s often from firms with the best marketing strategies or a persuasive salesperson. Some people settle for the first offer because they’re unaware of the cost savings they can make by getting an offer with the lowest rates possible. Besides, a mortgage application is often time-consuming and draining. It makes sense that most people want to skip the tedious shopping process. However, Denver loan expert Robert Sturms proposes working with an independent broker who can do all the shopping for you and then give you the best rates depending on your preferences.
Mistake #2: Stretching Your Finances to the Limit
Another common mistake home buyers make is purchasing a home that extends their finances to the limit. Often, a family wants to live in a dream house in a good neighborhood. In such cases, the home buyer has a strong emotional attachment to their envisioned house, so they stretch their finances to acquire it. Fear of missing out also makes people take bigger mortgage loans to keep up with trends. However, this mistake can cause more stress because you must make payments even when difficult. A better strategy is to work with a loan expert to assess what you can pay monthly without compromising your financial health.
Mistake #3: Skipping the Pre-Approval Process
According to CNBC, a pre-approval process takes about half an hour to 10 days. This process seems lengthy and inconvenient for some people, so they skip it altogether. However, pre-approval is one of the most essential steps when buying a home because it gives insights into the amount you can borrow. Through these insights, you can make more informed decisions. Sellers also may prioritize selling offers to pre-approved home buyers. Besides, you may become disappointed when you discover you can’t secure financing for a home you love.
Mistake #4: Failure to Factor in Disbursal Time
Usually, mortgages aren’t processed immediately – the lender takes some time, usually a few days, to evaluate and value your property. They process the loan after approving the applications, a multi-step process. However, the procession period varies from one lender to another. Therefore, if you need the loan within a short period, you should go to a suitable who can disburse the amount within the short period. If necessary, engage your lender to discuss the requisite document for expediting the disbursement.
In essence, getting a mortgage loan is more than financing – it’s also ensuring you get the best deal possible. Sometimes, that means shopping around for the best rates and going through all the processes. Or it could mean working with an independent broker who does the heavy lifting for you.
