Investing is a new home is very challenging, exciting yet scary. Buyers need to be very careful because ignorance and small errors can turn out to be expensive. Below are some costly and shattering buying process errors to avoid.
- No clarity on a budget – The right budget does not have to be the one that financial institutions, describe it as ‘affordability’. The possibility that you are uncomfortable to spend that much cash. So, it is crucial to set a budget you are comfortable to spend. Ignoring budget means you beat around the bush, waste time, and ultimately invest in a home that can cause plenty of financial issues.
- Skip mortgage qualifications – Having a pre-approved loan is a smart move. It is necessary to know if you are eligible for a loan and whether the amount approved is sufficient or not. Banks can decrease or reject loans, if your income is unstable or credit is poor.
- Ignoring hidden & added costs – A move from paying rent to mortgage is not simple. Buyers need to consider the closing cost, homeowners insurance, homeowner’s association fees, and property taxes. Besides, the major cost there is the ongoing maintenance cost, which needs to be added to your monthly mortgage. Can you bear all the cost?
- Skip down payment – One installment skipped means the loan and interest amount gets higher. Besides, you will have to pay minimum 20% insurance on house paid off.
- Ignoring house inspection – An appealing home exterior can turn out to be a nightmare because you ignored checking the interiors and are now stuck with unexpected repairs. Do a thorough house interior inspection to get an idea of the actual condition.
Home purchasing process details
Home buying process needs to be understood from start to end.
- Application & approval – Mortgage loan process needs to be completed. Submit an online loan application from and the Loan officer from the potential mortgage company will review and contact you.
- Supporting documents for pre-approval – Besides a complete loan application you will need two years W2’s and 1040 federal tax returns, 2 months current bank statements, recent one-month’s pay stubs, and asset statements.
Documents for a full loan approval
- ID copy like passport or driver’s license
- credit/debit card details for appraisal ordering
If applicable…….
- Homeowner’s insurance declaration page & current mortgage statement
- Pension/retirement/SS income
- Rental properties details
For VA financing
- DD214 copy – for military personnel, which can be requested online or via Digital Express or mail or fax.
- Completed COE form 26-1880
- If you are still on-duty, a service statement from commanding officer
- COE [Certificate of eligibility] – Loan consultancy firm can help you with this.
If you are self-employed……
The last two-year documents need to be added.
If applicable……
- Corporate tax returns
- 1099s
- K-1s
While purchasing a house make sure to avoid the above errors given above. Avoiding such errors means you can easily invest in a great home within your budget. Besides even ensure to get a pre-approval for mortgage and be prepared for all the documents needed in the home purchase process.
