When you think of buying or selling a home a real estate agent may be the first professional that comes to mind. However, there are many other professionals that will help you along the way, especially your mortgage broker. Many home buyers find the mortgage process to be “complicated,” therefore Realtor.com® recently highlighted some of the most common pitfalls when getting a mortgage and how to avoid them.
- Not Shopping Around
Approximately half of home buyers only meet with one mortgage lender, according to the Consumer Financial Protection Bureau. Lenders interest rates and offers can vary. This means if you don’t shop around you may miss out on some savings. For example, a 4% rate on a 30-year fixed-rate mortgage compared to a 4.5% rate on a $200,000 loan could mean saving about $60 per month or $3,500 over the first 5 years.
- Waiting for a 20% Down Payment
Having a 20% down payment can keep you from paying extra fees, such as CMHC mortgage insurance, but mortgage rates are still low-so waiting to save could mean you miss out on a good rate.
- Pre-qualified vs. Pre-approved
It’s important to know the difference. Pre-qualification is just a basic overview of the buyer’s ability to obtain a loan. It’s a general estimate of the size of the loan you may be able to get, but not a guarantee. Being pre-approved is a more detailed analysis of a buyer’s credit and assets. Your pre-approval will involve receiving written confirmation from your lender, which is a commitment for financing up to a certain loan amount.
- Moving Money
You can have delays if you start moving your money from account to account. Lenders want to see that finances have remained the same. This can be a red flag to lenders to make sure your money stays put.