There’s nothing like the moment when you’ve found your dream home. It’s easy to get caught up in the excitement and move quickly to finalize everything. However, while timeliness is important, rushing the process can lead to mistakes that may cost you thousands of dollars.
Here are the four biggest mistakes people make when securing a mortgage loan:
Mistake No. 1: Not Shopping Around for Mortgage Offers
It’s tempting to go with the first mortgage offer you receive, especially when you’re eager to close the deal on your new home. According to a LendingTree study, 54 percent of people do just that — they get only one offer.
Jacob Channel, LendingTree senior economist, explains why this is a mistake:
“Different lenders can offer different rates to the exact same borrower. With that in mind, the first rate you’re offered may not be the lowest one you can get. The more offers you can look at, the better.”
Think about it: If you go to only one store to compare prices, wouldn’t you miss out on potential savings? The same goes for mortgages! Different lenders offer different rates, and even a small difference in interest rate can translate to significant savings over the life of your loan. The same LendingTree study found that 45 percent of those who did shop around for a mortgage ended up with a better offer. This means almost half the buyers who took the time to compare multiple offers saved money.
Mistake No. 2: Relying Solely on Recommendations
It’s great to trust your real estate agent’s recommendations. After all, we work to build strong relationships with lenders and vendors to best serve our clients. However, if your agent recommends only one lender, it can limit your options. Each lender will have different options and tools for securing a mortgage.
Aim to get at least two mortgage offers to compare. Diversifying your lender options can help you find competitive rates and better terms.
Mistake No. 3: Ignoring Different Loan Types
Not all mortgage loans are created equal. Beyond the typical 30-year, fixed-rate mortgage, there are various loan types like adjustable-rate mortgages, FHA loans, VA loans, and USDA loans, each with its benefits and drawbacks. Ignoring these options might mean missing out on a loan that could better suit your financial situation.
This is another reason that it’s important to shop around. Each lender may have access to different types of loans. Discussing all of them will help you understand which one aligns best with your circumstances.
Mistake No. 4: Not Considering Future Financial Plans
When choosing a mortgage, consider your long-term financial plans. Are you planning to stay in the home for a long time, or might you move before 10 years is up? This can influence which type of mortgage loan — i.e., fixed vs. adjustable rate — is a better option for you. Additionally, think about how your income might change over time and whether you might want to make extra payments to pay off the mortgage faster.
Aim to align your mortgage choice with your financial goals to ensure you’re making the most strategic decision.
Securing a mortgage loan is a significant step in the homebuying process, and avoiding these common mistakes can save you time, money, and stress. Remember, it all starts with shopping around! By doing so, you’ll be well on your way to getting the best mortgage deal possible.
Lifetime Home Support and Home Support Team Partners
Are you looking for recommendations on vetted mortgage lenders in Sioux Falls? At Amy Stockberger Real Estate, we have a network of trusted Home Support Team lender partners who can offer you preferential treatment and competitive rates. Contact us today and we’ll connect you with one of our reliable partners to ensure you get the best mortgage offer for your dream home.
Our Lifetime Home Support™ model ensures that you have access to a dedicated Home Support Team at every stage of your homebuying and selling journey. From securing the right mortgage to moving in and beyond, we’re here to provide ongoing support and valuable resources.
Ready to achieve your homeownership goals with ease and confidence? Reach out today to learn more about how we can help you every step of the way.
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