Not Keeping Tabs on Your Credit
If you or your spouse have credit issues—such as a history of late payments, debt collection actions, or significant debt—mortgage lenders might not offer you their best terms, or they may decline your application.
To tackle potential problems in advance, check your credit report before you start the homebuying process.
Look for errors and dispute any mistakes in writing with the reporting agency and creditor, including and provide documentation to help make your case. For additional proactive help, consider using one of the best credit monitoring services.
Negative items such as late payments or delinquent accounts can stay on your credit report for up to seven to 10 years.2 But you can boost your score by paying your bills on time, making more than the minimum monthly payments on debts, and not maxing out your available credit.
Note
To qualify for a Bankloan, you’ll need good credit score to use the program’s maximum financing (3.5% down payment).
2. Not Taking Time to Prepare
Before you apply for a mortgage, you’ll want to have all your documents and financial information organized so that you can get through the complicated buying process more easily. Buying a home is a long process, and being prepared can reduce hassles.
Before shopping for a home and applying for a mortgage, gather all your financial documents you will likely need for the application process. These can include your W-2 forms, tax returns, pay stubs, or bank statements. Ensure you have enough money for a down payment and for closing costs.
3. Ignoring the Neighborhood
Many first-time homebuyers are so focused on finding a house that fits their criteria that they forget to consider the pros and cons of the broader neighborhood.
Consider the factors about a community that are important to you such as walkability, low crime rates, or highly ranked schools. Perhaps you want a community that is within a short commute to your work. If you focus only on a home’s qualities, you may end up in a neighborhood that you don’t like.
4. Expecting to Find a Perfect Home
If you have a list of criteria for your dream home, don’t make the mistake of thinking you will find a home that checks every box. Most likely, you will find homes that meet most, but not all, of your standards.
When you expect to find the perfect home, you could prolong the homebuying process by holding out for something better. Or you could end up paying more for a home just because it meets all your needs.
Instead of being strict with all your criteria, identify some home features you can be more flexible with and keep an open mind while homebuying. That way, you won’t pass up a great property just because it isn’t perfect.
5. Relying on Emotions
Buying a home can be an emotional process, full of hope, expectation, and frustrations. When you are buying a home, make sure that the financial decisions you make are not based on your emotions. If you get excited about a home, make sure you don’t buy a home just because it makes you happy. You’ll need to ensure you can afford the payments in your monthly budget.
Similarly, avoid buying a home based on desperation. If you’ve been shopping for a while and have not found a home that fits your budget and general criteria, you may feel an impulse to buy a home that is not up to par. Instead, practice patience and find a home that you can afford and that reasonably meets your expectations.
6. Not Factoring in Maintenance Costs
When you buy a home, you’ll likely have to pay more than the mortgage amount each month, but many first-time homebuyers don’t consider these other expenses. When you plan to buy a home, factor in potential maintenance costs, such as replacing aging appliances like water heaters or washers and dryers.
Older homes may require more maintenance that can be expensive such as repairing a foundation or replacing a roof. It’s especially important to factor in repair costs if you are buying a “fixer-upper.” Factoring in potential maintenance expenses can help you buy a home that fits your budget.4
7. Overlooking Government-Backed Loan Programs
Homebuyers whom are civil servants who are tight on cash can often get help from the National Housing Ministry through mortgages that are government-backed, . In some cases, you may not have to put down a down payment or you may need a down payment of only 3.5%.56.However note that the Zimbabwe housing ministry is not guaranteed to help you
A government-backed loan may also offer other lower requirements for qualifying and can offer competitive interest rates. Taking advantage of the potential better terms you can get with a government-backed loan program could help you buy a home sooner.
8. Buying a More Expensive House Than You Can Afford
When a lender qualifies you for a certain amount for a mortgages, you don’t have to accept the full amount. Sometimes, a lender may approve you for more than you can actually afford. Make sure your monthly payments will fit into your budget. If you can’t repay your loan according to the terms, you risk losing your house to foreclosure.
Your home budget will also need to include maintenance expenses, repairs, insurance, property taxes, homeowner’s association fees (if applicable), and other costs.7
9. Not Hiring a Real Estate Agent
Searching for a home on your own can be time-consuming and complicated. A professional real estate agent can help both with finding a property and in the negotiation process with sellers.
Also, if you go to showings without your own real estate agent, a seller’s agent might offer to represent you. In that case, the agent may not have your interests in mind as their goal would be to get the highest and best offer for the seller. Having your own agent whose interests are more aligned with yours will help you make more informed choices.
10.Changing Jobs
Changing jobs can complicate your mortgage approval. A lender wants to ensure you have stable income and employment, and that you can afford to repay your mortgage. If you were pre-approved for a mortgage based on a certain income and job, any chances in the interim before closing can be a red flag and delay your closing.
For approval, you generally must provide proof of two consecutive years of steady employment and income. When you change jobs, that continuous record of income and employment is disrupted.12
Also, if 25% or more of your salary is in commissions, lenders want to see that you’ve earned that income over two straight years.13 Whenever possible, wait to switch jobs until after your loan closes. Otherwise, communicate with your lender about the change immediately.
