1. Start searching for a home before applying for a mortgage
Many first-time buyers start viewing homes before ever getting in front of a mortgage lender. In today’s market, housing inventory is tight because there’s far more buyer demand than affordable homes on the market.
In such a competitive market, you’ll find it almost impossible to get your offer taken seriously unless you have a mortgage preapproval (or cash in hand). That’s because sellers won’t want to take a risk on someone who isn’t even certain they can get a mortgage — especially when they have many other offers on the table.
2. Talking to only one lender
Shopping for a mortgage is like shopping for a car or any other expensive item: It pays to compare offers. Mortgage interest rates vary from lender to lender, and so do fees such as closing costs and discount points.
3. Trying to buy a house you can’t afford
Before you start visiting houses, figure out how much house you can afford. In many cases, lenders will preapprove you for more than you need or would be wise to spend.
A mortgage payment you can’t afford is a particularly heavy burden because it’s hard to change without selling the home or moving.
“If your mortgage turns out to be too much of a monthly payment, then you could find yourself in a difficult position,” Fasi says.
4. Emptying your savings
Spending all or most of your savings on the down payment and closing costs is one of the biggest first-time homebuyer mistakes.
“Some people scrape all their money together to make the 20 percent down payment, so they don’t have to pay for mortgage insurance, but they are picking the wrong poison because they are left with no savings at all,” Fasi says.
5. Not checking your credit reports
Mortgage lenders will scrutinize your credit reports when deciding whether to approve a loan and at what interest rate. If your credit report contains errors, you might get quoted an interest rate that’s higher than you deserve. That’s why it pays to make sure your credit report is accurate.
6. Miscalculating costs
First-time home buyers are frequently shocked by high repair and renovation costs. They get a repair estimate from just one contractor, and the estimate is unrealistically low, and their perspective is distorted by reality TV shows that make renovations look faster, cheaper, and easier than they are in the real world.
If you have questions or need more tips from a top real estate broker, get in touch with one of the top real estate brokers from Montreal who also serves Brossard and Laval area Fasi Zaywari.