Jim and Stacey Brebner with HomeSeed help people get loans for buying homes. They were kind enough to talk to me about the most common home buying mistakes people make – and how they can be avoided.
So what are the mistakes buyers make when they’re purchasing a home with regards to their credit?
1. Not Getting Pre-Approved
The biggest mistake we see with home buyers is not getting pre-approved. In this marketplace, things are so competitive that you have to get pre-approved before you start shopping. Offers are being put out so often, and you can miss out on an opportunity if you’re not pre-approved.
2. Buying More House Than You Can Afford
I’d say the number two mistake is just buying more home than you can really afford. Getting into a monthly payment on your house can makes you house-poor. Work with your mortgage loan officer to figure out what that payment really should be, and what you’re comfortable – and then start shopping for that home.
3. Opening Up New Lines of Credit During the Process
The third thing too is just being careless with your credit during the loan process. When lenders do a pre-approval at the beginning of the loan process, they’re pulling your credit. They’re taking what we call a ‘financial snapshot’ of your financial situation. If anything changes at all during that loan process, we’re gonna take a critical if that looks different from the beginning financial picture. It’s will alarm the underwriter. So don’t open up any new lines of credit, don’t go buying furniture or a new car. Just keep your financial status the same as when you started in the loan.
4. Saving for a Big Down Payment
The fourth mistake is not understanding that you don’t have to go in with 20% down. You can actually go all the way down for first-time homebuyers to 3%. FHA loans are 3.5 %. There are even zero down programs like VA and and USDA. And there’s down payment assistance to help you get that down payment like the Washington State Housing Finance Commission. You don’t have to have 20 % down – most of the time people don’t have, so don’t worry about it.
Got more questions? Give me a call or drop me an email and I’m happy to help you.