When you’re buying a home, people seem to come out of the woodwork to give you advice. But a lot of that advice is actually terrible, and could actually get you in trouble if you listen to it.
So what, exactly, is that terrible advice? A recent article from realtor.com outlined some of the worst mortgage advice buyers receive when getting ready to buy a home, including:
- “You don’t need to get pre-approved for a mortgage.” If you’re just starting to look at homes, and aren’t sure when you’re going to buy, some people will tell you not to worry about getting pre-approved for a mortgage. But if you don’t, you have no idea how much house you can afford, and as you’re looking at homes, you might fall in love with a property that’s completely out of your price range. That’s why it’s important to get pre-approved before you start looking at homes; not only will it help you avoid the heartbreak of falling in love with a too-expensive home, but if you do decide to put in an offer, it can help give you a competitive edge over buyers that didn’t go through the pre-approval process.
- “You should get a mortgage from the same place you have your bank account.” Your bank might be able to give you the most competitive rate on a home loan, but they might not, and if you don’t compare loans from multiple lenders, you’ll never know. Before you buy a home, make sure to shop around and go with whatever lender is going to give you the most favorable terms, regardless of whether you have an account there or not.
- “Borrow as much as the bank will give you, and spend it all.” Just because a bank is willing to give you a certain amount for a loan doesn’t mean you have to take or spend it all. Buying at the top of your budget can add financial stress to your life, and if you end up facing an unexpected financial hardship — like a job loss or serious medical expense — it could make you unable to pay your mortgage. Before you buy a home, make sure to iron out what you can comfortably afford and only borrow that much (or less), even if the bank is willing to give you more.