How to Avoid Mortgage Mistakes
Mortgages might seem daunting, but they don't have to be as nerve-wracking as a trip to the dentist or your annual physical. According to a survey by Freeandclear.com, a staggering 75% of home loan applicants equate the mortgage process to these anxiety-inducing experiences, largely due to the extensive credit checks and overwhelming paperwork involved. However, with the right approach and knowledge, securing a mortgage can be a straightforward and stress-free process.
Here are six expert tips from seasoned mortgage professionals Manny Delgadillo, manager at Wells Fargo Home Mortgage Center in Los Angeles, and Evan Geiselhart, president of Midwest Home Trust Mortgage in Schaumburg, Illinois, to help you avoid common pitfalls and ensure a smooth home buying journey.
#### 1. Maintain Open Communication
The home buying process involves multiple parties — you, the seller, your agent, the seller’s agent, and the lender. Keeping everyone informed is crucial. A simple miscommunication about a credit agreed upon between the buyer and seller, for example, can delay the entire process if it isn't documented properly. As Geiselhart emphasizes, "There’s no such thing as too much communication."
#### 2. Prepare for Closing Costs
Closing costs can be substantial, typically ranging from 2% to 5% of your loan amount. It's important to have funds set aside for these expenses. If you’re short on cash, explore assistance programs. Many state and local governments, as well as nonprofits, offer programs to help cover these costs. Delgadillo notes that Wells Fargo offers a $750 credit towards closing costs for first-time buyers who complete an online homeownership course. Additionally, don’t hesitate to ask family for help or negotiate with the seller to cover some or all of the closing costs.
#### 3. Unfreeze Your Credit Early
If you have a security freeze on your credit report, make sure to lift it before you start shopping for a mortgage. This freeze can protect against identity theft but also blocks lenders from accessing your credit report. Delgadillo warns that unfreezing credit via mail can take up to two weeks, potentially delaying your mortgage approval.
#### 4. Avoid Major Purchases After Pre-approval
Once pre-approved, avoid any large purchases or new credit applications. These can significantly impact your credit score and debt-to-income ratio, possibly affecting your final mortgage approval. Geiselhart shares a cautionary tale of a buyer who purchased a luxury car right before closing, nearly jeopardizing the entire deal.
#### 5. Update Your Employer's Contact Information
With many people working remotely, verifying employment can be challenging for lenders. Delgadillo suggests providing your lender with comprehensive contact information for your employer, including email addresses and mobile numbers, to avoid delays.
#### 6. Don’t Hesitate to Ask Questions
There are no silly questions when it comes to understanding the mortgage process. Both your lender and real estate agent are there to assist you, so make the most of their expertise. Whether it’s about loan programs, closing costs, or any part of the home buying process, asking questions can provide you with valuable insights and options.
By following these expert tips, you can navigate the mortgage process more confidently and efficiently. Remember, preparation and communication are key to transforming what seems like an intimidating process into a successful and stress-free home buying experience.