We all know that searching for and viewing potential homes is the fun part of the home-buying process. The not-so-fun part? The mortgage.

But if you don’t pay attention to the details, your mortgage can end up dragging down the enjoyment of your new home and cause some major regrets. Here are a few mistakes to avoid to ensure that you love your mortgage terms as much as your hew home.

Don’t find your home first: Shopping around for the best mortgage rate should be the first step in the home buying process. You may even want to talk to a mortgage broker a full year before you plan to buy. It’ll give you time to get your affairs in order to qualify for the best rate, could save you thousands of dollars in the long run, and you won’t feel rushed to accept an unattractive loan because you’re worried you’ll miss out on your dream home.

Don’t forget your real budget: There’s often a big difference between what a lender says you can afford and what you can actually afford. Your debt-to-income ratio doesn’t include the money you spend on hobbies, or the cost of commuting to work, or maintenance and utility costs. Really sit down and examine your spending before committing to the loan amount the lender is offering. You won’t enjoy your home nearly as much if it’s eating into your favorite hobbies.

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What does a title company do?

When you purchase a home, a title company will research the property to ensure that you are the rightful owner. They’ll look through records for anything that might cause problems-ownership disputes, restrictions, unpaid taxes, liens, and more. Their goal is to document the chain of title and identify any issues that could become major problems down the road.

At the end of the process, the title company issues a title opinion. This is a legal document that states that the title is valid. The title opinion is part of obtaining title insurance. The insurance protects both the owner and the lender if there is a title dispute. If another party is actually the rightful owner of the home, your title insurance protects you from financial loss.

In addition to title opinions and title insurance, title companies also handle escrow accounts and distribute money to the appropriate parties at closing. They’ll also deliver closing documents to the appropriate agencies.

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  1. Meet with a Real Estate Professional: There’s no commitment required on your part for the initial meeting. It will be educational and help you identify your next steps.
  2. Establish a Price: Your agent will provide a market analysis, which will help you set an asking price.
  3. Strategic Price: As difficult as it may be, it’s important to review the market analysis and consider your home price objectively.
  4. Prepare Your Home: View your home through the eyes of the buyer and ask yourself what you’d expect. Your agent will offer some useful suggestions.
  5. List It For Sale: When everything is in place your agent will put your home on the open market. It’s critical you make it as easy as possible for potential buyers to view your home.
  6. Showings: Potential buyers may ask to see your home on short notice. It’s best if you can accommodate these requests, you never want to miss a potential sale.
  7. Offers and Negotiation: If everything goes well, a buyer and (most often the agent who represents them) will present your agent with an offer.
  8. Choosing an Offer: Your agent will present the benefits and risks of each offer. You will have the opportunity to either accept or counter any offer based on its merits.
  9. Under Contract: At this point, you and the buyer have agreed to all of the terms of the offer and both parties have signed the agreements.
  10. Final Details: While under contract, the buyer will work with their mortgage provider to finalize the loan and perform other due diligence.
  11. Inspection: The buyer will usually perform a physical inspection of the home. They may even ask you to make certain repairs. Your agent will explain all of your options regarding the inspection.
  12. Closing: This is the transfer of funds and ownership. Depending on when the buyer moves into the home you will need to be all packed up and ready to move.

  1. Meet with a real estate professional: Discuss the type of home you’re looking for, including style, price, and location.
  2. The Buyer’s Advantage: As the home buyer, your agent’s commission is paid by the seller of the home in almost all circumstances. This means your representation costs you nothing!
  3. Get Pre-Approved: You will need pay stubs, W2s, and bank statements. Knowing what you can afford is critical to a successful home shopping experience
  4. Search for Homes: The fun part! Your agent will schedule showings and help you find the perfect home.
  5. Advanced Search: Not all real estate websites are the same. Your real estate professional has tools and systems to ensure you see every available home that meets your criteria.
  6. Make an Offer: Your agent will prepare your offer based on the price and terms you choose.
  7. Negotiation and Contract: It may take a few tries to get it just right, but hang in there. You’re on your way!
  8. The Contract: In most cases the contract provides you with a timeline to obtain financing as well as time to inspect the physical condition of the home. Your real estate professional will inform you of all your rights and responsibilities related to the contract.
  9. Under Contract or In Escrow: You and the seller have agreed to the price and terms. The home is effectively held for you until closing.
  10. Final Details: Perform due diligence, order the appraisal, conduct an inspection, and review terms with the lender.
  11. Preparing for Closing: You will be finalizing your loan, reviewing documents, and discussing the findings from the inspection. Your agent will manage this entire process for you.
  12. Closing: This is the transfer of funds and ownership. A title company or an attorney typically acts as an independent third party to facilitate the closing.

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No matter how much time you spend on researching and educating yourself about your home purchase, it’s hard to cover every detail. Here are a few tips for avoiding rookie mistakes with your first home purchase.

  1. Save as early as you can: Even if you think you’re years away from buying your first home, try to start saving for your down payment. It makes a huge difference in your monthly payments, and helps avoid paying Private Mortgage Insurance.
  2. Be thorough with mortgage shopping: There are countless resources out there that can help you get the best terms for your mortgage. It may seem like a lot of work to shave less than a point off your mortgage rate, but it’ll save you thousands in the long run.
  3. Consult a skeptic: You’re likely to fall in love with a home, and that can make it difficult to take problems seriously.
  4. Be patient with getting settled: You’ll be anxious to make your new home your own, but take some time to see how your budget truly shakes out. In other words, hold off on big furniture purchases and remodeling projects.
  5. Make sure you’re happy with the neighborhood: The house may be perfect, but don’t discount the surroundings. You don’t want to end up in the suburbs if you’re going to miss walking to your favorite coffee shop, and you don’t want to settle for the city if you’re looking forward to some peace and quiet.

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