Buying a home is an exciting time, but it can also be a stressful time when you have to fill out a lot of paperwork and make decisions that can impact you for several years, and even decades, into the future. Before you sign any closing documents, here are some of the most common pitfalls that homebuyers encounter during the mortgage loan process and some tips on how to avoid them so everything goes as smoothly as possible.
Never Sign Blank Documents
A mortgage is a significant investment and a big financial commitment, so before you sign any documents related to your loan or the purchase of your home, you need to have all the information and fully understand what your payments will be and what you are signing up for. Unfortunately there are fraudulent mortgage loan companies out there that might try to convince you to sign documents that have details left blank or that gloss over important details of your loan, but this can set you up for financial disaster in the future. Ask a lot of questions and make sure all the details are disclosed before you add a signature.
Know You Can Afford Your Payments
If your dream home has a payment that is outside of the budget you can afford, it’s best to take a step back and find another home rather than trying to stretch to buy a house you cannot afford. If you are unable to make your monthly payments, the end result is foreclosure and often damaged credit, so it’s worth it to downsize and get something you know you can repay.
Don’t Fall for Tricky Payment Schemes
It’s less common today than it was several years ago, but sometimes lenders will create very confusing loans that include low up-front payments that will increase over time, causing your payment to go up to more than what you can afford. While they may try to convince you that you can easily refinance or sell before this new payment will come due, you never know what your financial situation and market conditions will be at that time, which will determine whether refinancing or selling the home is even feasible. Don’t sign up for a loan that you know for certain you will have to change to be able to afford at a later time.
Disclose All Your Information Accurately
Trying to hide negative financial information from your personal history, or inflating numbers to get approved for a loan that is out of your reach can cause serious damage in the future, and could derail your loan application entirely. It’s safe to assume that this information will be discovered (either before the loan goes through or after, at which time it could be considered a crime of mortgage fraud), so be up front about it now to avoid those problems later.
Don’t Try to Do It Alone
There are plenty of helpful resources out there that can ensure you fully understand your options and know what to expect throughout your home buying process. Talk to a mortgage loan company today to find out more and ask about what resources are out there to help you get the ideal loan for your financial situation.