Planning on Buying a Home? Here Are the Mortgage Mistakes to Avoid in Today’s Market

When you start looking for a home, it’s important to understand the current market and how those market conditions will ultimately impact the process, and that includes getting a mortgage.

Because the market has changed so much over the last few years, mortgage best practices have also changed. If you want to successfully buy a home, you need to be current on what to do — and what not to do — when applying for a mortgage.

So what, exactly, are those “not-to-do’s?”

A recent article from realtor.com outlined mortgage mistakes you’ll want to avoid in today’s market, including:

• Assuming you need a 20 percent down payment. Many buyers assume you need a 20 percent down payment before you can buy a home. But there are a number of loan programs that allow you to buy a home with a much lower down payment, including FHA loans (3.5 percent down) and Fannie Mae (3 percent down for first-time homebuyers).
• Assuming you can get an instant loan. We live in a society centered around instant gratification. And because things happen so quickly, many buyers assume the mortgage approval process will be the same. But the truth is, there are a number of steps involved in getting a mortgage, and if you wait until you’re ready to make an offer to start the process, you might lose out on your dream home. (Or you might not even be able to see your dream home; in today’s market, many listing agents are requiring buyers to submit a pre-approval letter before scheduling a showing.)
• Confusing pre-qualification with pre-approval. Getting pre-qualified for a loan is often the first step of the process some buyers take. But because lenders don’t review your finances during the pre-qualification process, it’s no guarantee that, when the time comes to make an offer, you’ll actually be able to secure the loan. Make sure to get pre-approved before starting to look at homes. If you’re in a super competitive market, you might even consider getting fully approved prior to looking at homes, which will allow you to close the deal significantly faster, and can make your offer more attractive to sellers.