by BRITTANY ANAS
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Buying a home is stressful, but it doesn’t need to be this way. Step one: Deep. Breaths. Step two: Learn from homeowners who have “been there, done that” and mortgage pros who can help make the process more seamless.
“Your own bank is limited in the loan products they can sell you because they’re not looking to sell other banks’ products,” says Josh Goodwin, a Tampa-based lender. Mortgage brokers, on the other hand, don’t work for any specific banks and can find you a wider variety of loans, often at better rates.
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Many homebuyers zero their mortgage search on the lowest interest rates, says Goodwin. But the lowest rate doesn’t always translate to the best deal. Be sure to layer in lender charges, origination fees, and closing costs.
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NerdWallet’s home expert Holden Lewis recommends getting your official free credit report before you apply for a mortgage. You can then immediately dispute any errors that you find, potentially securing you a lower interest rate.
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“The number one reason buyers are denied financing is a high debt-to-income ratio (DTI),” says Greg Stewart, chief operating officer at Bungalo. If you’re shopping for a government-backed mortgage, you’ll want to keep your DTI under 43 percent, according to the Consumer Financial Protection Bureau.
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Buying a home requires a lot of paperwork, and sometimes it will seem nonsensical, offers Scott Hastings, a Charlotte, North Carolina-based mortgage lender. When you’re beginning house hunting, you’ll want to gather up all documents to have on hand.
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You’ll want to budget between 2 to 5 percent of the home to cover closing costs, recommends Brian Walsh, Certified Financial Planner. “Unfortunately, if people forget about closing costs they end up liquidating all of their savings which leaves them unprepared for unexpected expenses,” he says.
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