First-time homebuyers are often overwhelmed by the homebuying process. Not only do they have to make major decisions regarding the house’s location, size and so on, they also have to deal with a host of procedures that help them get a mortgage — from preapprovals to closing.
And in this process, it is easy to make mistakes, which could cost you a lot of money over the life of your mortgage loan or upfront. That is why first-time homebuyers — and even experienced buyers — must slow down and ensure that they take all the necessary steps to get the best mortgage they could get.
Here are a few points to keep in mind.
You might love your bank, but when it comes to mortgages, shop around. Even an eighth or a quarter of a percentage point difference in your mortgage rate would save you thousands of dirhams over the life of the loan. In addition, you must be sure that your bank or lender is experienced in providing loans that cater to your particular circumstances. For example, do you have a variable or seasonal income? Do you have little to pay down or none? Working with a lender that can get you the best loan for your circumstances is invaluable.
Check out that record of your lender in terms of how smoothly the process could go. A lender that complicates your closing unnecessarily can cost you the entire deal — and a lot of money. So make sure that the lender’s teams that handle the entire loan process are known to be efficient. How would you know? Ask around and check independent reviews.
Know the process and costs
You won’t be able to ask smart questions unless you know what to expect. A home loan comes with various approvals, home inspection, appraisal, escrow, closing, etc. All of these steps can be complex if you’re not sure what they involve. That is why educate yourself ahead of time and make sure that you ask the right questions — not only about the costs but also about the timeline and steps involved in each.
A lender must be able to provide you with details of costs and process. If not, you should question why. When you get these details upfront, you will be able to include them in your shopping for a loan before committing to one. Some lenders might offer perks or waive some fees or charges, so go ahead and ask. In a competitive market, your loan means business to lenders, so don’t hand it out without checking for all saving options.
Be prepared for the unexpected
It is not unlikely to encounter a few bumps along the road. The lender might find a problem with your qualification or with the property. The more knowledge you have in advance, the better prepared you will be for any of these scenarios. But generally, the unexpected could happen and it doesn’t always mean that the deal will fall through. Ask your lender about the best way to handle any problem efficiently.
If you had been prequalified for the home loan by several lenders, feel free to reach out to any of your contacts and see if they would pick up the loan if it falls through. This could be a stressful exercise, but if you keep your cool and try to work on solving whatever problem you encounter, you should be able to get through it.
Finally budget a little bit more money. Like a home renovation project, your home purchase could cost you more than initially planned. A delay in closing could mean another month of rent. Similarly, your new home might need some repairs or cleaning, so try to budget a little more money for emergencies or unexpected events. By doing so, you can reduce your stress levels while getting into your new home.
Crucial tips on getting a mortgage
► Find and work with experienced lenders
► Pick the right loan for you
► Know what the process involves
► Be ready for hiccups and delays
Rania Oteify, a former Gulf News Business Features Editor, is a Seattle-based editor.