Buying a new home is a very expensive process with mortgages, down payments, inspections, closing costs, and repairs. Therefore, doing everything they can to save money is often at the top of buyers’ minds, and this can sometimes lead to rushing the process and cutting corners. Avoid the below mistakes to save the most money and ensure a smooth settlement process.
For many, buying a home with straight cash is not an option, so most buyers will be on the hunt for a lender to mortgage their home. It can be easy to jump at the first opportunity, however, shopping around is likely to save buyers money. When shopping around it is important to look at more than just the rates, as other factors may make a loan more personally suited. For example, some banks will offer loans specifically for first-time buyers, many offer income-specific loans, and some even offer to put money towards your down payment or settlement costs. Buyers should always do research and figure out what is best for their financial situation.
Buyers can often make the mistake of finding their dream home before searching for lenders. This often means that once they fall in love with a property they can’t make an offer as quickly as they’d like, and as they say, time is money. By finding a lender and being properly vetted before the property search, the settlement process is likely to go much smoother and more efficiently. Working with a lender prior to the house hunt can also confirm a buyer’s budget and ensure that they are looking in the correct price-range.
Before finding a lender, it can be a smart move for a buyer to check their credit score. As with most large financial commitments, a credit check is completed before a lender provides rates for a mortgage, so confirming there are no errors in their credit report can save buyers a ton of money. With websites such as Credit Karma and several major banks offering one free credit check a year, there is no excuse to not check credit scores and ensure that all details are correct.
Buying a home that is above their budget is another very common mistake buyers make. Yes, at the time, a couple of thousand over budget doesn’t seem like much, especially if it is for the house of their dreams, but it is important to stick to the budget decided on. A decrease in income can come at any time and emergencies happen so going over a budget can likely cause problems further down the line. Buyers can also forget to calculate how much they will be spending on heating and cooling in a new home, especially if it is larger, in addition to property tax and maintenance.
Skipping a home inspection may seem like it can save a buyer money, however the couple of hundreds of dollars saved initially can turn into thousands further down the road if repairs are needed. It is always better to be safe than sorry when a home inspection is concerned.
During the settlement process it is vital that a buyer’s credit is as untouched as possible. Many buyers assume that their credit score is checked once and then the rate is offered, however this is not the case. The majority of lenders will check a buyer’s credit score right up until the last week of closing, and if it has dropped, they will make adjustments to the rate they are offering. These adjustments could include cancelling the loan altogether, therefore postponing or cancelling the closing. Buyers should avoid buying furniture, cars, or appliances during the settlement process and should also refrain from taking out new credit cards.
Find out how Champion Title & Settlements can help with your home-buying process at www.championtitle.com.