June is Homeownership Month, and we’re here to help you take the next step toward owning your own home. As you begin preparing, it’s important to be aware of common, preventable mistakes that can slow down the process. A little preparation now can help make your home buying journey much smoother.
Not Getting Pre-Approved Early
Waiting too long to get pre-approved could mean missing out on a home that checks all your boxes. Getting pre-approved early helps you understand your budget and puts you in a better position to act quickly when the right home becomes available.
Only Shopping for the Lowest Interest Rate
Interest rates are important, but they’re not the only factor to consider when it comes to buying a home. Other important considerations include:
- Closing costs. These can vary by lender, so it’s worth comparing options to understand the full cost of the loan.
- Mortgage options. Different loan programs may better fit your financial situation and long-term goals.
Making Large Purchase Before Closing
Opening new lines of credit or making major purchases before closing can negatively impact your credit score and increase your debt-to-income (DTI) ratio. DTI changes may affect your ability to qualify as well as your interest rate and loan costs, so it’s best to hold off on major purchases until after closing.
Focusing Primarily on the Down Payment
Saving for a down payment is important, but it’s equally important to plan for additional homebuying expenses, including insurance, taxes, home inspections, and closing costs. Having a financial cushion can help reduce stress when unexpected expenses arise.
Not Checking Your Credit Report
If you’re thinking of buying a home in the near future, it’s a good idea to check your credit report for free online. Look for any errors and signs of fraud, such as accounts you did not open. Discovering issues before beginning the mortgage process can help you avoid unnecessary delays later on.
