Figuring out the financing is one of the most important steps in the home buying process. There are numerous questions frequently asked about mortgages and the mortgage process.
One topic that doesn’t get discussed enough when it comes to home financing are the common mortgage mistakes that are made. Honestly, there is someone out there right now making a mistake that is likely costing them their opportunity to buy a home in Lagos.
It’s extremely important that when buying a home, buyers are educated on the most common mortgage mistakes made so they can avoid them at all costs. Making one of the most common mortgage mistakes can be the difference between a buyer getting approved for a loan or not.
Below you’ll find out 4 of the most common mortgage mistakes made when buying a home. If you’re thinking about buying a home in Lagos or are currently in the market, make sure you avoid the following 4 mistakes.
1. Getting A Mortgage Pre-Qualification, Not Pre-Approval
Many potential home buyers in Lagos don’t realize that there’s a difference between a mortgage approval and mortgage pre-qualification. Not getting a mortgage pre-approval is a huge mistake often made when buying a home.
A mortgage pre-qualification sometimes is only as good as the piece of paper that it’s printed on. A mortgage pre-qualification is often issued by a mortgage lender without doing any research on the potential borrower. Many times a mortgage pre-qualification is issued based on the information a potential borrower provides to the lender. It’s optimistic to think that all potential borrowers are going to be 100% honest when attempting to get a pre-qualification, but that’s simply not the case.
Getting a mortgage pre-approval is highly recommended when buying a home for many reasons. A mortgage pre-approval is issued only after a lender reviews pay stubs, tax returns, credit reports, and other important financial information about a potential borrower.
Top realtors in Lagos will ask for a mortgage pre-approval before showing homes since it greatly improves the chances the buyer is able to secure financing, which is often unknown when only having a mortgage pre-qualification.
Bottom line, not getting a mortgage pre-approval is one of the worst mortgage mistakes made by buyers. Taking the additional time required to get a mortgage pre-approval and putting forth the extra effort will pay huge dividends when buying a home in Lagos.
2. Assuming All Mortgage Products, Lender Rates, & Terms Are The Same
Another mortgage mistake often made by home buyers is believing that all mortgage products, lender rates, and terms are identical. An important decision that must be made when buying a home is deciding which type of mortgage is the best for your situation.
Is a 15 or 30 year mortgage best? Is a conventional or an FHA mortgage best for you? Is an adjustable rate mortgage or fixed rate mortgage best?
These are just a few mortgage products that lenders will offer. Each of these mortgage products will offer different terms as well as rates. It’s highly recommended that you know how to interview realtors when buying a home and it’s no different when deciding on financing.
There are several questions that you should consider asking mortgage companies when shopping around for your home financing. Below are some of the best ones to ask potential lenders.
- Which type of mortgages do you offer?
- What are the current rates for each mortgage product?
- What are the costs associated with each mortgage product?
- What are your credit score requirements for each mortgage product?
- Why should I use your company to obtain my home loan?
Asking these questions may be difficult for some buyers, but asking them can tell a buyer a lot about the lender. Buyers who don’t realize there is a difference between mortgage products, each lender’s rates, and the terms are potentially costing themselves hundreds of dollars.
3. Adding Too Much Debt
A surefire way for a buyer to get denied for a mortgage after pre-approval is to add a bunch of extra debt. Another popular mortgage mistake made by home buyers is adding too much debt.
Ask any realtor in Lagos if they have any horror stories of buyers adding too much debt prior to buying a home and I’m certain you’re going to hear dozens of stories. As a buyer is navigating through the home buying and mortgage process, one of the most important pieces of advice is to not add any additional debts.
Adding too much debt when going through the mortgage process can mess up a buyer’s debt-to-income ratios, which ultimately can result in being denied a mortgage.
4. Not Paying Attention To The Fees Associated With Getting A Mortgage
Another important mortgage mistake is not paying attention to all the fees associated with getting a mortgage is another common mortgage mistake. Mortgage products and rates will vary from lender to lender, as mentioned above, and the same goes for the fees a lender will charge.
Buyers need to ask any potential lender what the costs of getting a mortgage through their company will be. It’s recommended to have those costs in writing in order to compare companies.
Some of the most common fees that’ll vary from lender to lender include the origination fee, credit report fee, processing fee, and underwriting fee. These mortgage fees can vary significantly and can potentially cost a buyer a significant amount of money.