If you’re getting ready to buy a home, you’re likely realizing that one of the most important parts of the process is getting approved for a mortgage that works for you. To get the best rate and avoid losing your deposit, steer clear of these common mistakes.

Leaving out details from your financial profile.

The best way to avoid doing this is having a great mortgage lender. Making sure you include not only your basic information, employment and living history, income, assets and debts, but also ensuring you answer every single question. Leaving details out of your profile can throw off the entire process, so having someone who is meticulous enough to make sure all your information is made available is key.

Assuming pre-approval is equal to actual approval.

Pre-approval for a mortgage means that you’ve talked to a potential lender or maybe even provided some documentation that gave the impression that you will be approved for a certain amount. Don’t be confused - this is not an actual approval. You need to make sure your loan is approved by an underwriter before making any offers to buy a home. When you are “underwriting approved” you will be able to get a formal loan commitment. Without this document, there is no proof of actual approval, meaning that your profile has been evaluated but nothing official to show approval.

Failing to provide every single piece of documentation needed.

Your lender is going to want very detailed documentation of your financial profile, including the following:

• Pay stubs covering 30 days

• 2 of tax returns & W-2s

• YTD business financial statements (if you’re self-employed)

• 2 months of statements for all your asset accounts

• Explanations and paper trails of all deposits withdrawals over $1,000

• A home insurance quote with adequate coverage

• Full financial information on any other homes/businesses you own

You will need to provide all these documents, and if you have a commissioned or variable income, you will need to give permissions to your lender to verify that income. Your credit will be run, which can expose any information you didn’t disclose. 

Not knowing enough about mortgage rates.

Once a seller accepts your offer, you will be in contract on that home and you will be ready to lock in your mortgage rate. You cannot lock your rate until you’re in contract, which means that any rate market movement can impact you until then. Rates change throughout each day, and they are priced based on how long they are locked. A shorter lock, about a month or less, will have a lower rate than a lock of 60+ days. If you want to avoid any surprises, talk to your lender and ask them to use your closing timeline to quote rate locks

Are you ready to buy a home and you are considering going in the route of new builds? It may seem like an easy enough process, where you get to call the shots of how you want your dream home to be, but there is a lot of risk when it comes to new construction if you are going in blindly. It's unfortunately not as trouble-free as we'd like to hope, especially if you don't have the right representative by your side to help with the things that need to be looked out for from a professional's eye. Below, we'll dive into the many reasons you need a professional buyer's agent representing you in the sale. We are, after all, on your side. It's our job to ensure you aren't taken advantage of by the builders and their representatives in the transaction.  Our team has helped many home buyers through this process and are aware of what to look for at all steps of the process!
 

1. HIRING THE RIGHT BUILDER

The most important part of finding an agent is having a professional's perspective to finding a builder with a great reputation. You get to benefit from your agent's network of vendors, lenders, and home builders. They have the industry expertise to connect you with a builder that matches your needs, and more than likely, have already had experience with the builder with a past client. Or, if they haven't worked with a builder you want to use directly, they can gather person-to-person recommendations from other agents to know the expected experience with said builder. They will help you find one that not only delivers exactly what their clients want, but in a timely fashion.

2. THE RIGHT LOT IN THE RIGHT NEIGHBORHOOD

The lot you choose to go with in a new build can either be a positive to your new home, or potentially detrimental. In the excitement of the process, we tend to overlook important features of a property. It's important to have a professional help ensure you make a purchase that will best serve you. They'll be able to find a neighborhood that best fits your lifestyle and a lot that has a location that works for you. Whether you're single with pets, or a family with children, the lot location can really make a huge impact. Especially when it comes time to selling it in the future. These are important things your agent will be able to help walk you through, so your decisions work in your favor in the long term, as well as now.

3. UPGRADES AND PLAN MODIFICATIONS

Not only will your agent be able to ensure you get the upgrades and modifications that will best suit your lifestyle, but they will also help you make decisions that will increase the value of your home in the long term. They are working with your best interest in mind, and with an agent's guidance, you can be sure to make changes that end up benefiting you. 

4. HANDLING CONTRACTS AND PAPERWORK

Your agent will handle the contract and all of the paperwork. They will be sure to review it to ensure that it is in your best interest. They will be able to help you break down the best loan types, purchasing processes, and steps to make you the beneficiary, not the builder. They are, after all, working for you. They'll make sure there are no overlooked terms in a builder's contract that could end up hurting you after you move in, or even during the building process. You want to make sure you have a professional who is experienced with the paperwork and contracts and knows how to make revisions that work in a way that make you happy. 

5. NEGOTIATIONS

It is imperative in the purchasing process to have an agent that is able to represent you and negotiate for you. The building process is so much more than having the builder put in your favorite counters and floors. They will be able to get you a price that actually benefits you - not the builder. They will be able to run a comparative market analysis to ensure you are paying a fair price for the property. You don't want to end up overpaying for the home - it could put you in a tough spot when it comes time to sell. They'll also be able to negotiate terms around building time frame, closings costs, and so many other aspects of a contract that you may otherwise overlook. 

6. BUILDER'S AGENT REPRESENTS THEM, NOT YOU

It may seem easy just to pop into an office of a new build, or a builder's office, and use the onsite agent. But keep in mind that this agent works FOR the builder, NOT for you. Therefore, they will be working to make sure the builder gets the best deal at the end of the day. By having a buyer's agent of your own, you can ensure there is a professional on your side that can walk you through the process and help you avoid being taken advantage of during the transaction. They will also have a better handle on things when you hit bumps along the way. If you end up working with a builder who isn't holding their end of the deal, they will have the power to make connections that ensure the builder holds their end of the contract terms.

Although the internet can be a great resource for a variety of information, a lot of that information is incorrect. One of the most important and expensive decisions in your life, home buying, tends to circulate a lot of misinformation. Most of that misinformation is in regards to how much of a down payment you need or what your credit score needs to be. Let's go over the real facts about buying a home and knock those myths out, so they don't hinder your ability to purchase!  

CREDIT SCORES
Though it may come as a surprise, you don't need a perfect credit score to purchase a home. Traditional bank lenders will work with credit scores as low as 640, but your agent can also get you connected with local lenders that accept credit scores as low as 580. Although there are other required stipulations to qualify for the loan, you don't need a perfect score in the 700's or 800's to get approved for a mortgage. 

DOWN PAYMENTS

You don't have to sell an arm and a leg to be able to purchase your dream house. There is a huge misconception that you need to pay a minimum of 20% down to buy. That information is outdated. These days, there a large variety of loan programs that only need an average of 3-5% down. Based on your income or military status, you may even qualify for mortgage programs that require 0% down. Although you'll expect to pay an additional 3% in closing costs, which is separate from the down payment, this is still significantly less that 20% of the purchase price. If you're in a buyer's market, you may even be able to negotiate for the closing costs to be covered by the sellers. 

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Be sure to connect with us to ensure you have the right facts. Don't let online myths persuade you into thinking you can't qualify or afford to buy a home. There are a variety of programs to help you get into your dream house. Since these vary county to county, and state to state, it's imperative to call your agent and let them fill you in on the facts.