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5 Mistakes of First Time Home Buyers

Welcome to the wonderful world of purchasing your very first home! To start things off, a congratulations is in order for you - buying a home is nothing shy of a big deal, and serves as a milestone in life that you should look back on with fond memories. That being said, today’s housing market in the United States is faster and more competitive than ever before. That means that, as a first time home buyer, you need to arm yourself with as much knowledge as possible to make sure that you’re getting a good deal on your new home.

Commerce Bank Can Help Finance You
One of the most important aspects of purchasing a home is obtaining the right mortgage loans. Our first time home buyer programs here at Commerce Bank of Wyoming utilize our best mortgage lenders to ensure that you’re getting a deal on your home mortgage that works for you and your life situation. You can learn more about our mortgage services at our Rock Springs bank by visiting here.

Otherwise, let’s take a look at some of the common mistakes of first time home buyers for you to learn what not to do when it comes to purchasing a home.

Not Getting Pre-Approved Early On
Getting pre-approved for a mortgage is important for a few reasons, but here are two of them: For one, getting pre-approved gives you a realistic understanding of how much you can spend on the house. Another reason that getting pre-approved is so important is because it shows sellers that you’re serious and gives you slightly more standing if you’re competing for homes with all-cash buyers.

You can make this part of the home buying process less stressful by gathering up relevant financial documents such as bank statements, tax returns and pay stubs, and also by checking your credit report for any errors in advance. All things considered, given the competitive interest rate environment and the competitive housing market, it’s smart to be prepared and organized before you start the process.

Maxing Out Your Mortgage Limit
Even though it’s tempting (especially if you’ve fallen in love with a property that’s outside of your budget), just because a lender says that you can borrow a certain amount doesn’t mean that you actually should. Indeed, staying below a certain mortgage limit will give you more financial flexibility to cover the added expenses that come with purchasing a home as well as any long-term changes to your income.

Another smart piece of advice: create a budget that includes how much money you can spend on housing costs each month and then use those numbers to figure out what your ‘real’ mortgage limits are.

Waiving Contingencies Without Understanding The Risks
In highly competitive housing markets, there’s an understandable yet unfortunate reality where buyers are making offers that aren’t contingent on financing or inspection. So, while waiving contingencies can make your bid more desirable in the eyes of the seller, it can also make the transaction more risky on your behalf.

Before opting out of the contingencies in your contract, have a conversation with your realtor and even a lawyer. In a worst-case scenario, you could end up losing your deposit. If our Rock Springs bank is sure about anything, it’s that no one wants to lose any deposit of any amount.

Allowing Your Credit Score To Change Before The Close
Just because you received a pre-approval letter does not mean that you’re guaranteed to get funding for your mortgage. Not only that, but if your credit score or income levels change drastically between the pre-approval and the closing of the loan, lenders may change their terms or even rescind the offer entirely.

So, while you’re in the process of shopping for that dream home, make sure to stay on top of your bills, pay them on time, and steer clear of new credit accounts, even if that means you have to wait to pick out your furniture or get other nice things to fill your new home with. Lastly, if possible, try not to switch jobs until after you close, particularly if you’re transitioning into a new industry.

Assuming You Won’t Get Approved For A Mortgage
In an ideal world, you would like to have just about as little debt as possible. Another ideal thing would be to have a 20 percent down payment prior to borrowing money for a home. However, even borrowers with less can get loans in today’s market, thanks to options like Federal Housing Authority loans, which are meant to help out low-income and first-time buyers.

Interviewing Only One Lender
Interviewing multiple lenders is the way to go, and here’s why: the fees and rates offered by lenders may vary substantially, and they all offer different service levels and different loan products. So, find the best deal you can by contacting multiple lending sources.

Commerce Bank Can Help You With Mortgage Loans
We’ve worked with countless first time home buyers to help them find a home loan that works for their financial situation. Get in touch with Rock Spring’s best mortgage lenders today

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