Avoid Making Costly Mistakes When Buying Your First Home– Follow These Expert Tips When Shopping For a Mortgage

Trying to find the perfect house can sometimes feel like trying to win the lottery. While there may seem to be plenty of choices out there, ending up with one that fits every criterion–especially a buyer’s budget– is difficult. No wonder numerous house hunters suffer from something called ‘buyer fatigue’.

This can be extra challenging for first-time homebuyers who are charting the untested waters of the mortgage application process. So, here are some expert-approved tips they could keep in mind to avoid making costly mistakes when buying their first home.

Consider Affordability

Don’t go too big when choosing a starter home to avoid being saddled with a mortgage premium that one may find too steep to afford

It’s no secret that home prices can get high depending on where one plans to buy a home. There’s the risk that first-time buyers might end up with a house they can barely afford. Worse, they may realize this too late as they notice the impact that a high monthly mortgage payment has on their lifestyle.

As SuperMoney CEO Miron Lulic noticed, people can end up putting themselves in a tough financial situation because they committed too much of their resources into a house. This typically leaves them with not much left each month to put away in their savings account and the like.

Shopping Around

Lulic also warns people against going for the lender that their real estate broker recommends as they may not offer the best rates

Another tip that Lulic has is to shop around for a mortgage. More importantly, be sure to ask the ‘right questions’ when inquiring at various lenders. Skipping this may end up costing first-time homebuyers thousands of dollars that they can otherwise earmark for other expenses.

Next, go the extra step of filling out a mortgage application from more than just one institution. Lulic compares this technique to the one consumers use before making any other large purchase. The great thing is that a person can now easily go online submit a couple of applications and immediately get an idea of rates that they can get.

Increasing the Down Payment

Some first-time homebuyers are lucky if they can ask help from their parents to afford their down payment

One way a buyer can lower the interest rate they’ll end up with is by increasing their down payment. People can also ask another party, such as their parents, to co-sign on their mortgage to decrease rates. This is because these acts will also reduce the lender’s risk and might cause them to lower rates for the applicant.

The Rate Lock

The mortgage rate lock is an agreement between the lender and the borrower that lets the latter to lock in the interest rate for a certain amount of time. This serves as a protection on the buyer’s side from a possible rise in interest rates. Borrowers are advised to get in writing specifically happens when this lock terminates.