The Biggest Mistake People Make When They Look for a Mortgage
Richard Thaler is a Nobel Prize-winning economist with a theory about irrational economic behaviors. Based on his research, he believes that consumers generally don’t spend enough time investigating their options, become easily confused when presented with complex alternatives, and are resistant to change — even if it costs them. In particular, these are behaviors exhibited during complex tasks, like securing a mortgage. We believe it! The mortgage process can be an overwhelming experience. But it doesn’t have to be that way. The Cushing Team of Guild Mortgage here in Reno is sharing what you can do to help ensure a smooth process, and it starts with avoiding the biggest mistake people make when they look for a mortgage.
Your First Move
From the prospective homeowner’s perspective, the home buying process as a whole can be daunting. There are multiple hurdles to clear, from house hunting to making offers to home inspections to securing a mortgage. Partnering with a trusted, experienced real estate agent can help alleviate some of the ensuring anxiety. And taking the time to consider your options when it comes to a mortgage lender is another, which brings us to that big mistake.
The single biggest reason people behave irrationally with a decision as big as a mortgage is because they don’t begin the process early enough. Waiting until the last minute to secure a mortgage brings a sense of urgency to the experience from the very beginning. Once a purchase agreement has been signed, deadlines suddenly loom. Borrowers feel pressured to get moving, and they’re far less likely to spend time considering all of their options.
What Can You Do?
It’s important to understand that mortgage rates can vary lender to lender and even day by day. Speaking to several lenders to learn about your options can mean a big savings in the long run, so it’s your best interest to look around well before you find that dream home. As you consider your options, follow these best practices:
- Compare fees and costs – Low interest rates are important, but keep an eye on fees for things like closing costs and titles.
- Compare apples to apples – If you’re researching different types of mortgages, make sure you’re comparing the same product from one lender to another.
- Start early – Before the house hunt, start looking for a lender. You’ll want to secure a pre-approval letter anyway, and you’ll have the luxury of pressure-free time to find the right mortgage for your needs.
- Know where you stand – Be clear on the facts regarding your credit score, the kind of house you’re considering, your target price, and how much you plan to borrow. Share this information with your potential lender so they can offer you a suitable product.
Buying a home and finding a mortgage are inherently stressful experiences. Rushing the process just makes it worse. Give yourself time to find the best mortgage so that you’re ready to move quickly once you find that dream home. Then you’ll have the satisfaction of knowing that you’ve made the best decision when it comes to financing, and you’ll have blown an economic theory to pieces in the process!
For mortgage assistance here in Reno, contact the Cushing Team today.