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Every month, Robert Heck reviews hundreds of mortgage applications. As the Mortgage Arrangement Manager at Morty, an online mortgage broker who Forbes recently rated was now valued at $ 150 million – it’s Heck’s job to help clients choose the right loan and the right lender. So we asked Heck what he learned about buying a home and how to make the best decision no matter how bad the housing market is.
1. Don’t get carried away by the real estate fever
Once upon a time, to see homes on the market, you had to meet with a real estate agent and take an in-person tour. Now we can browse the listings and scroll through the photos of our sofas. Constantly refreshing food and tracking homes sold can make you feel like you’re missing out on that perfect home. According to Heck, that overwhelming sense of anxiety you’ll miss out on can trump any sensible decision making.
“We see a lot of bidding wars that drive up house prices, everyone wants to buy a house in a certain area,” he said. “It’s really important to take a step back and really make sure that the house you’re competing for is actually the one you want, both financially and personally.”
2. Ask all the right questions
You have increased your credit score. You spent money on this down payment. Now comes the hard part – deciding on the mortgage lender and the house itself. Heck’s advice if you are in this process: Being afraid to admit a lack of knowledge will hold you back.
In 2021, interest rates are low (some mortgage rates are below 3% – find the best mortgage rate you could qualify for here), so on that side, you have a good chance of getting a good deal. But anyway, it’s worth shopping around and considering what different lenders can offer, from the interest rate to closing costs. “The most important thing is that you don’t have to do something that you aren’t comfortable with from an affordability standpoint,” Heck says.
And when you don’t understand something (what does all that jumbo mambo of disclosure actually mean ?!) you should ask. “You never want to feel pressured or asking a stupid question. First-time homebuyers should have a thousand questions, it’s okay to not know what you don’t know.
3. Square your numbers
You have been approved for a mortgage. It’s awesome! Before you start looking for homes, you’ll want to keep all of your other living costs in mind. For example, will you have to pay more money per month to get to work by commuter train rather than the metro? What about taxes, lawn maintenance, unexpectedly having to fix that old boiler? Don’t forget all the costs associated with closing the house, moving in and doing basic repairs.
If you are on an upward trajectory and plan to make more money, you should always keep a budget in mind. Heck suggests keeping the lessons from the Great Recession in mind. And while low interest rates can be tempting, unforeseen financial events, like job loss, can be catastrophic. Like everything else in life, it boils down to risk, Heck says. Beyond your down payment and the costs of updating that 1970s kitchen, can you afford to live in your home in the event of a disaster?
“First-time homeowners and homeowners in general should at least be aware that there are things out of our control that are potentially going to impact your income and your ability to pay your mortgage,” he said. -he declares. “People should do the mental exercise of ‘how many months of mortgage payments can I make with the savings I have now? What if our income drops by 10%, can I still contribute to our rainy day fund to support us if something unforeseen happens? “
“By sticking to the numbers and all the original things that you thought were essential at first, you’ll stay focused,” Heck said. “There is a house out there that suits you, you can wait until you find it.”