Preparing to Buy a Home: Four Costly Mortgage Mistakes to Avoid

When preparing to buy a home, avoid these five common missteps that can increase the cost of your expenditure even more.

1. Not checking your credit report: When you apply for a mortgage, the first thing a lender will do is check your credit report. The better your credit score, the lower the interest rate you’ll receive. If you have extremely poor credit, you could even be rejected from getting a loan. Because of this, request a copy six months to a year before you plan on applying for a mortgage. That way, you have time to improve your credit score or fix errors on your credit report.
2. Changing jobs frequently: Lenders want borrowers that have consistent employment status and a steady stream of income. If you’ve bounced around from job to job, banks will think you’re a risky candidate for a loan, and you’ll be quoted a higher interest rate, or won’t be able to secure a loan at all. If possible, remain in your current job until you’ve signed your mortgage paperwork.
3. Not shopping around: Even though the Federal Reserve sets the benchmark interest rate, interest rates can vary amongst lenders, and banks often have different borrowing requirements and fees. Seek out quotes from several banks to avoid overpaying on your mortgage.
4. Not locking in your interest rate: Interest rates are always fluctuating. In order to keep the rate you were quoted, you must lock it in. If you’re unable to close on the property within a certain time frame, you could be on the hook for a higher interest rate or additional fees for extending the lock period. 

For help in buying a home, call me at 317.777.1805 or email me at scott@lacysells.com.