When Buying a Home
When Buying a Home – Many Americans need a second mortgage to buy a home. The rules are relatively simple. You find a home you like at a certain price, you make an offer, the bank chooses between the two actions, and the bank signs a contract.Sounds pretty simple, right? But there are some mistakes to avoid when you buy a house for this method. The biggest mistake is that consumers will go directly to the lender rather than looking at other options. Some people do not realize that home loans are the largest transaction most people will make in their lifetimes. By going direct to the lender for this purchase, many buyers are given a false impression of what the process is really like.
These three mistakes can cost you quite a bit of money and time.
First, buyers may think that the lender holds their hand through the entire process. This is blindly putting one’s head in the sand and ignores the possibility that what goes on behind the scenes might be a different, grosser scenario. The economy is good, at least for the time being, and money does flow. Unfortunately, lenders can’t get around the economy in a permanent way. As the economy weakens, lenders will be less likely to take that kind of risk. An integral part of buying a home is locating the best mortgage rates in the market. Giving yourself a false sense of security, buyers enter into deals without checking on the back end rates and conditions. The economic stress of the housing market, and the uncertainty of home values has already taken its toll. Many buyers have little or no credit established, and have more difficulties navigating the home finance approval process.
Second, buyers often have unrealistic expectations regarding their rates. The credit score and financial situation of the buyer often determine the loan rates. The previous point that I made about buying a house already made me change my tune, but it can be said that many buyers don’t shop for rates based on credit score and financials. They shop first based on the ‘who’ is going to buy it, and how do we get them. I can almost hear the buyers saying “It’s a buyer’s market, so who’s going to sign less than I?” It’s imperative that you have a consistent income and history you can document. The lower the credit score, the higher the rates. It just makes sense.
And finally, there is the trust issue. Buying a home often involves quite a bit of trust between the buyer and the seller. If you’ve put yourself in the place where the seller trusts you to honor your commitment to pay, or the person who is buying the house trusts you to honor your commitment to pay, you have won half the battle. If your credit score and financials are lower, you have what it takes to secure the best rates. This trust may require some work on your part, and it can’t happen over night. The longer the process takes, the easier it is to get lower rates.
I’m a big advocate of buying a home instead of renting, especially if you can afford it. I’ve lived in a couple different places, and each time I’ve bought I’ve been satisfied. Just keep your eye on those things I called micro areas. If you have solid credit and more income, you can get great loans up to 80% of the value of the home.