Whether you’re a first-time homebuyer or not, you must know the real estate market is constantly changing. It ebbs and flows more than virtually any other industry, which is what makes it such an exciting industry. If you’re in the market for a new home, you should learn or refresh yourself on a few things pertaining to home loans AL. Like the real estate market, the lending game regularly changes. Don’t let yourself lose out on the house of your dreams because you make a few rookie mistakes shopping for a home loan.
Check Your Credit Report First
Every major credit bureau is required to provide you with a free copy of your credit report each year. Spread these free reports out every few months. This allows you the frequent ability to check your reports, and you can fix mistakes or dispute incorrect items quickly. Your credit might be stellar in your mind. However, mistakes are not uncommon on reports. It’s up to you to contact the bureau and the creditor in question to have incorrect items removed or repaired prior to shopping for a home loan. Even a small mistake can make a significant difference, which can affect what you qualify for in terms of a home loan.
Never shop for a new home without a preapproval letter from a lender. Not only are some homeowners and realtors unwilling to work with buyers who cannot show they are serious about a purchase, you might lose bidding wars without a preapproval letter. A seller might accept a lower offer from a buyer with a preapproval because they have less to worry about in terms of the financing falling through.
Know What You Can Afford
This is not always what the bank tells you is affordable in your preapproval letter. The bank might tell you a $400,000 home is in your budget, but you did the math and realized you can comfortably afford $250,000. Don’t listen to the bank. They don’t know your personal financial situation as you do, even if they do require you submit so much of your financial information. Don’t spend more than you are comfortable spending, or you will become house poor.
Shop Around for Rates
Don’t go with the first lender you speak with. Ask your credit union for a quote, speak to an online lender or two, and ask your long-time bank. You might be surprised how much rates vary, how much closing costs change, and how fees differ at different lenders. Sometimes it’s the higher rate and the lower fees that are more affordable. Do the math, shop around, and find the best loan for you.
Your house hunting experience might have its ups and downs, but the financing process should leave you feeling comfortable. It’s the most expensive purchase you will probably make, and it shouldn’t be one you enter into without first knowing what you can afford. Know what works, and find the right loan.