Primary Residence vs. Second Home vs. Investment

Sometimes I’m surprised I miss the most basic of mortgage definitions, seeing that this blog has been around for more than a decade, but alas, I’ve never written about occupancy specifically.

So without further ado, let’s talk about the three main types of occupancy with regard to qualifying for a mortgage because they’re pretty important.

Mortgage Occupancy Type

mortgage occupancy type

Primary Residence (Where you live)

  • This is the property you live in
  • All or most of the year
  • Underwriting guidelines are easiest for this property type
  • And mortgage rates are the lowest

This is your standard owner-occupied property, a home or condo you plan to live in full time. Or at least the majority of the time. It may also be referred to as your principal residence.

It can be a single-unit property or a multi-unit property, but you must live in it most of the year.

The property should also be reasonably close to where you work, if applicable, and you must sign a form that says you plan to occupy said property shortly after closing.

Now the good news. Since it’s your primary residence, mortgage rates are the lowest, and it’s also easier to get a mortgage because guidelines are more flexible. This means you can potentially put less down or refinance at a higher loan-to-value (LTV).

We’re talking a 3% down payment mortgage, which is pretty much the lowest down payment you can get away with unless the lender has a zero down program, which again would likely only work on a primary residence.

Additionally, you can get all types of different loans, from an FHA loan to a VA loan to a USDA loan. There are few restrictions because it’s a property you intend to occupy.

For this reason, unscrupulous borrowers will sometimes try to fudge the occupancy and say they live in the property, even if they don’t intend to. This is not a matter to be taken lightly as it constitutes fraud.

If you’re a real estate investor, or simply own more than one property, it’s imperative that your bank statements and other important documents are mailed to your primary residence each month.

If you claim one house to be your owner-occupied property, but your bank statements and other financial materials are currently going to another one of your properties, it’s a red flag.

The mortgage underwriter will surely question the occupancy, and your mortgage application will very likely be declined.

Here’s a common scenario. A borrower submits a home loan application for the subject property as their primary residence.

When conditioned to provide verification of assets, they use bank statements from another property they own and the file gets declined for occupancy fraud.

In the eyes of the bank/mortgage lender and the investor, it doesn’t make sense for a borrower to send bank statements, cable bills, and other financial statements to a property they don’t occupy for the sheer reason it wouldn’t make sense if you didn’t live there.

Banks and lenders will likely decline a file if it’s listed as owner-occupied, or at best they’ll counter the borrower to re-submit the loan as an investment property.

Anyway, if the property in question will be the home or condo you plan to reside in, it is considered your primary residence.

Second Home (Where you vacation)

property rates

  • A second home is another way of saying vacation home
  • Not necessarily that you own two homes
  • Should be in a vacation area far from your primary residence
  • Can only be a single-unit property and mortgage rates can be slightly higher

Then we have the second home, which as the name implies, is secondary to your primary residence.

In a nutshell, this means you already have another home you live in full-time, or most of the year, along with this secondary property, which is often referred to as a vacation property.

Think your cabin by the lake, or your ski chalet up in the mountains. Or perhaps your beach house, if you happen to be so lucky.

Distance is a factor here by the way, as is location. Lenders generally want it to be at least 50-100 miles away from your primary home, though exceptions are allowed if it makes sense.

For example, if you live inland and have a beach house 30 miles away.

It should also be a single-unit property, for obvious reasons. And you should occupy it for some portion of the year.

Put simply, it has to make sense as a second home, otherwise the lender may think you’re going to rent it out.

Because the property isn’t your primary, there will likely be a pricing adjustment for occupancy. This has to do with risk.

In the event of financial distress, a borrower is more likely to stop paying on their second home as opposed to their primary. This means mortgage rates must be higher to compensate.

Expect a rate that is higher, all else being equal. How much higher depends on all the loan attributes, but maybe .125% to a .25% higher than a comparable loan on a primary.

Altogether, not too bad. The illustration above might give you a sense of what to expect.

Also note that there will be LTV restrictions as well, meaning you’ll need a larger down payment for the purchase of a second home, or more equity if refinancing the mortgage. Chances are you’ll need 10% down, or a max LTV of 90%.

You may also find that mortgage credit score requirements will rise, so you might need a minimum credit score of 680 instead of 620.

Investment Property (The one you rent out)

  • This is a rental property
  • Can be condo or home, single-unit or multi-unit
  • Typically require large down payment
  • And mortgage rates can be much higher

Finally, we have the investment property, which again as the name makes abundantly clear, is a property you plan to hold as an investment of some kind.

This generally means it will be rented out, and that it will generate income. This type of occupancy comes with the most restrictions because someone else other than the borrower will be living in the property.

Additionally, the borrower will be a landlord, which isn’t as easy as it might sound. That all equates to more risk, which results in more LTV restriction and higher mortgage rates.

You might be looking at a max LTV of 85%, meaning a minimum 15% down payment. This can get more restrictive if it’s a 2-4 unit property. If you want cash out, expect an even lower max LTV.

Also expect higher asset reserve requirements and higher minimum credit scores.

As far as rates go, it could be .50% to 1% higher than a similar loan on a primary residence, depending on all the loan details. It can get really pricey if the LTV is high and it’s a 4-unit property, for example.

In other words, it’ll be harder to qualify and you’ll have to pay more to finance your non-owner occupied property.

The takeaway here is that it’s easiest (and cheapest) to finance a primary residence, followed by a second home, and then finally an investment property.

Each has different rules and guidelines that borrowers must adhere to if they want to qualify for a mortgage. Knowing this beforehand is important to avoid any unwanted surprises.


How About a 1% Mortgage Rate?

Well, maybe not exactly 1%, but in the 1% range? More specifically, starting with the number “1,” which on its own sounds too good to be true.

It’s now a reality thanks to, you guessed it, United Wholesale Mortgage, who again is bringing some of the lowest rates in the industry via their aggressive Conquest loan program.

In case you’re not familiar, UWM works exclusively with independent mortgage brokers, meaning you can’t call the (wholesale) lender up directly to get a mortgage rate quote.

Instead, you’ll need to find a mortgage broker that is approved and working with UWM, who can shop your loan with UWM among other partners.

If all works out, and you’re into the idea of a 15-year fixed mortgage as opposed to a 30-year fixed, a mortgage rate that starts with the number one might be in the cards.

Get a 15-Year Fixed Mortgage Rate Below 2%

  • UWM’s Conquest program now offers low rates on 15-year fixed mortgages
  • Interest rates starting as low as 1.875% for well-qualified borrowers
  • Those with high-rate 30-year fixed mortgages may not see a big payment difference when refinancing
  • Possible to save hundreds of thousands via lower interest expense

In order to qualify for a sub-2% mortgage rate, you’ll need to go with a 15-year fixed mortgage, which is inherently more expensive due to its shorter loan term.

However, that shorter term also means you’ll pay a lot less interest and own your home a whole lot faster.

And assuming you qualify for UWM’s Conquest program and manage to get a rate of 1.875%, the difference in payment may be negligible if moving from a high-rate 30-year product.

Let’s look at an example to illustrate. Say you took out a 30-year fixed at 4.875% two years with a loan amount of $300,000. Yes, rates were that high just two years ago!

Your current monthly mortgage payment would be $1,587.62. After two years, you’d have whittled that balance down to roughly $291,000.

If you were to refinance your mortgage into a 15-year fixed priced at 1.875%, your new monthly mortgage payment would be $1,855.91.

Yes, $268 more per month, but you’d be free and clear in 15 years, as opposed to 28.

More importantly, you’d pay about $200,000 less in total interest. Yes, $200,000.

If you kept the old mortgage, you’d pay $272,000 in total interest over 30 years, assuming you held it to maturity.

If we factor in the interest on the first two years on the old mortgage and 15 years on the new 1.875% 15-year fixed, it’s roughly $72,000 in interest total.

Does a 15-Year Fixed Mortgage Make Sense Today?

Now a 15-year fixed isn’t for everyone, especially those who can barely afford a 30-year fixed, or have a better use for their money.

There’s also a decent argument these days that your money could be better served elsewhere, with mortgage rates so cheap at the moment.

If you can borrow at around 2.5% to 3% on a 30-year fixed, there’s a good chance you can beat that rate of return in many other places.

However, if you’re risk-averse and totally dislike debt, which seems to be a lot of folks out there, this strategy could be pretty darn effective.

For the record, UWM also offers 30-year fixed mortgage rates as low as 2.5% via their Conquest conventional loan program.

Similar rules apply – most importantly, you must not have refinanced via UWM in the past 18 months to qualify for these low rates.

And it only works on home purchase loans and rate and term refinances (no cash out permitted).

Additionally, it has to be a primary residence or second home. In other words, only vanilla loans are eligible.

As I said when they released their 30-year program, it’s another sign (of confidence) that mortgage rates are likely going to move lower in the near-future.

In other words, we might see a 15-year fixed priced close to 1.5% at some point soon if this trend continues.

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for nearly 15 years.


How Low Will Mortgage Rates Go?

It seems that lately we reach a new all-time low for mortgage rates just about every week, which begs the question, how low can they go?

Indeed, mortgage rates have hit record lows eight times so far in 2020, and it is only mid-August.

If you had to bet, you’d probably guess that we’d see at least two more record lows this year, given the recent trend of lower and lower.

I assume that too would break some sort of record for most record lows in a calendar year, but that’s unclear.

What is clear is that we continue to see old records get broken with relative ease, and at this point even lower rates feel like a given.

The 2020 mortgage rate predictions are now totally laughable, with a 30-year fixed around 3.75% the most common response.

Can Mortgage Rates Get Even Better from Here?

how low will mortgage rates go

  • Fixed mortgage rates are already at all-time record lows
  • There have been eight record lows this year, including three record lows in three weeks recently
  • Is it possible that mortgage rates could move even lower in the second half of 2020?
  • The trend certainly seems to point to even lower rates, especially with wide spreads relative to Treasuries

As noted, mortgage rates are hitting record lows so often it’s becoming a bit of a non-event. Heck, I don’t even write about it anymore.

And it’s hard to know if homeowners are even excited about it at this point. When something happens on a weekly basis, it’s difficult to garner any sort of novelty.

There’s also an expectation at this point that mortgage rates will simply get better and better and better.

Oddly, you can’t blame folks for thinking that way because they’re probably right.

If you asked me right now if I thought mortgage rates would move even lower from their current levels, I’d say YES with no hesitation.

That’s not just a gut feeling – it’s based on math and data and events going on in the industry and the world.

Just Look at Spreads If You Want a Hint

treasury spreads

For one, the spread between 30-year fixed mortgage rates and the 10-year Treasury (which they track) is super wide at the moment.

At last glance, the 30-year fixed was averaging 2.88%, per Freddie Mac, while the 10-year yield was around 0.55%.

While yields did “jump” a tad in the latest week, the spread is still historically large, around 225 basis points.

Typically, the spread might be 170 basis points or even less, meaning the 30-year fixed could easily be pricing around 2.25% today if spreads were more normal.

This implies that mortgage rates have plenty of room to move lower, despite hitting a fresh record low just last week.

The next clue that mortgage rates may fall even more is the fact that a 2.25% mortgage bond coupon has already been introduced, all the way back in April.

That came four months ago, and we’re now in a very different, arguably more volatile and fragile August, which tells me it’s a matter of time before the 30-year fixed moves to that range and possibly beyond it.

Lower Mortgage Rates Are Already Being Offered

Finally, we’re already seeing certain mortgage lenders offer the 30-year fixed below 2%. So it’s not just a question of if, it’s already a reality.

This week, wholesale mortgage lender UWM announced the availability of a 1.999% 30-year fixed mortgage rate via its Conquest program.

In order to get that rate, you need to work with a mortgage broker since UWM doesn’t work directly with the public.

You also need to qualify for that rate by being a solid borrower with a vanilla loan scenario, e.g. excellent credit score, low LTV, conforming loan amount, etc.

And there’s a good chance you’ll need to pay mortgage discount points to obtain that rate.

That brings up another important point – it may not be wise to pay points right now given the trend of lower and lower mortgage rates.

If you’re just going to refinance your mortgage a second time a couple months later, you certainly don’t want to pay lots of money upfront for a home loan you’ll barely keep, and thus not actually benefit from.

Now in terms of how low mortgage rates will go, that’s anybody’s guess, but at this point I wouldn’t rule anything out.

We’re already seeing mortgage rates in the 1% range, and we’ve got the potential for a very wild second half of the year with a contentious U.S. presidential election and a stock market that refuses to read the writing on the wall.

The only real caveat, as I’ve mentioned before, is the lower you go, the harder it is to see massive improvement.

After all, if mortgage rates are already in the 1% range, how much better can they really get?

The caveat to that statement is I said the same thing when mortgage rates were 3%…


10 Things You Should Do Before Applying for a Mortgage

I recently wrote that you should look for a mortgage before searching for a property to buy because unless you have lots of cash, you’re going to need a loan.

Now let’s talk about what you should do before you apply for a mortgage to avoid common setbacks that could, well, set you back.

1. Rent a Place First

While it might sound like a no-brainer, renting before you buy a home or condo is a smart move for several different reasons.

For one, it’ll show you firsthand what goes into homeownership. If things break or go wrong while renting, you can typically call the property management company or landlord for help.

Once it’s your own place, you’ll be fixing it yourself or paying out of your own pocket for a professional to assist you.

Additionally, if you rent first you’ll have a lower chance of payment shock, which is when monthly housing payments jump exponentially.

Mortgage lenders like applicants who have shown in the past that they can handle large housing payments to ensure they don’t default for that very reason.

So renting will make you both a more knowledgeable homeowner and a better candidate for a mortgage.

That being said, it’s perfectly acceptable to live at your parents’ house before you apply for a mortgage too, at least in terms of qualifying.

2. Check Your Credit Scores and Reports

Most cliché advice ever. Yes, but there’s a reason. It’s very, very important, if not the most important aspect of home loan approval.

It also happens to take a lot of time to fix credit-related issues, so it’s not a last-minute activity if you want to be successful.

These days it’s also super easy to check your credit scores and reports for free, thanks to services like Credit Karma or Credit Sesame.

Simply taking the time to sign up and monitor your credit could make or break you when it comes time to apply for a mortgage.

It may also save you a ton of money as higher credit scores are typically rewarded with lower mortgage rates, which equates to lower monthly payments and lots of interest saved.

If your scores aren’t all good, tackle the issue(s) immediately so you’re in excellent standing (760+ FICO) when it comes time to apply.

3. Pay Down Your Debts

Similarly, knowing much how outstanding debt you’ve got, along with the associated minimum payments, can play a huge role in a mortgage approval.

Simply put, the less debt you’ve got, the more you’ll be able to afford on your given salary, all else being equal.

It can actually be a win-win to pay down debt prior to a mortgage application because it’ll boost your purchasing power and probably increase your credit scores at the same time.

The result may be even more purchasing power thanks to a lower mortgage rate, which drives payments down and increases affordability.

To determine how much debt you’ve got, grab a copy of your credit report and add up all the minimum monthly payments.

These all eat into your affordability, so eliminating them or reducing the balances can help.

4. Put the Spending on Hold

Staying in the credit realm, avoiding unnecessary swiping (or now dipping/tapping) weeks and months before applying for a home loan can have a big impact.

First off, your credit scores may drop as a result of more outstanding credit card debt. It’d be silly to make a small or medium-sized purchase that jeopardized your very large home purchase.

Secondly, the new debt may eat into your DTI ratio, thereby limiting what you can afford, even if you pay off your credit cards in full each month.

In other words, it may be best to just wait and make your purchases a month later, once your mortgage funds.

This is also true during the home loan process – don’t go buying the furniture until the mortgage crosses the finish line.

5. Organize Your Assets

Now let’s address assets, which are a close second to credit in terms of importance.

After all, you’ll need them for your down payment, closing costs, and for reserves, the latter of which shows the lender you’ve got money to spare, or a cushion if circumstances change.

But it’s one thing to have these funds, and another to document them.

You’re typically asked to provide your last two months of bank statements to show the lender a pattern of saving money.

To make life easier, it could be prudent to deposit all the necessary funds in one specific account more than two months before application.

That way the money will be seasoned and there won’t be the need for explanation letters if money is constantly going in and out of the account.

The ideal scenario might be a saving account with all the necessary funds and little or no activity for the past 90 days.

6. Think of Any Red Flags

Asset issues are often red flags for loan underwriters. They hate to see money that was just deposited into your account, as they’ll need to source it and then determine if it’s seasoned.

Same goes for recent large deposits. They need to know that it’s your money and not a gift or a loan from someone else since it wouldn’t technically be your money.

Try to think like an underwriter here. Make sure assets are in your own account (not your spouse’s or parents) well in advance and that it makes sense based on what you do for a living/earn.

Also take a hard look at your employment history. Have you been in the same job or line of work for at least two years, is it stable, any recent changes?

Any weird stuff happening with any of your financials? If so, address it personally before the bank does. Work out all the kinks prior to giving the underwriter the keys to your file.

And don’t be afraid to get a pre-qual or pre-approval just to see where you stand. You can have a professional take a look for free with no obligation to use them when you really apply.

7. Decide on a Loan Type Yourself

I see it all the time – a loan officer or broker will basically put a borrower in a certain type of loan without so much as asking what they’d like.

Not everyone wants or needs a 30-year fixed mortgage, even though it’s far and away the most popular loan program out there.

An adjustable-rate mortgage may suit you, or perhaps a 15-year fixed is the better play.

Whatever it is, do the research yourself before the interested parties get involved.

This ensures it’s a more objective choice, and not just a blind, generic, or biased one.

8. Think How Long You’ll Be in the Home

Along those same lines, try to determine your expected tenure ahead of time.

If you know or have a good idea how long you’ll keep the property, it can be instrumental in loan choice.

For example, if you know you’re just buying a starter home, and have pretty strong plans to move in five years or less, a 5/1 adjustable-rate mortgage might be a better choice than a 30-year fixed.

It could save you a ton of money, some of which could be put toward the down payment on your move-up property.

Conversely, if you’re thinking forever home, it could make sense to get forever financing via a fixed-rate product.

And also pay mortgage points to get an even lower rate you’ll enjoy for decades to come.

9. Understand Mortgage Rates

This one drives me crazy. Everyone just advertises interest rates without explaining them. Where do they come up with them? Why are they different? Why do they move up and down?

These are all important questions you should have the answers to. Sure, you don’t need to be an expert because it can get pretty complicated, but a basic understanding is a must.

This can affect the type of loan you choose, when you decide to lock your mortgage rate, and if you’ll pay discount points.

If you’re simply comparing rates from different lenders, maybe you should take the time to better understand the fundamentals while you’re at it.

This can help with negotiating rates too, as an informed borrower who knows the mortgage lingo will have an easier time making a case if they feel they’re being charged too much.

10. Check Reviews, Get Referrals, and Shop Around

Lastly, do your diligence on lenders upfront, not after applying.

It’s a lot harder to shop once you’ve applied because you won’t want to “lose your place in line.”

You could also lose your deposit if a lender charges you upfront and you go elsewhere.

It’s a lot more difficult to even be bothered once you’ve given someone all your financial information and signed a bunch of disclosures.

Whenever you buy a TV or a car, or even a toaster, you probably put a decent amount of time into research and price comparisons.

You don’t just show up at Best Buy or the car lot and purchase something that day.

With a mortgage, it’s even more important to put in the time since it’s such a massive cost, and one that sticks with you a lot longer. Try 360 months longer.

If you make missteps or fail to shop for a better price, it’ll sting month after month, not just once.

Remember, real estate agents influence lender choice for nearly half of home buyers. Wouldn’t you rather make that choice yourself?

(photo: Javi Sánchez de la viña)


Beware the New Mortgage Fee Fearmongering

You may have heard there’s a “new mortgage fee.” And you might have been told to hurry up and refinance NOW to avoid said fee.

While there is some truth to that, it is by no means a reason to panic, nor is it even applicable to all homeowners.

Additionally, it’s possible it may not save you money to refinance now versus a couple months from today, depending on what direction mortgage rates go.

So before we all get in a tizzy and give in to what some are clearly utilizing as a scare tactic, let’s set the record straight.

What the New Mortgage Fee Is and Is Not

  • A 50-basis point cost known as the Adverse Market Refinance Fee intended to offset COVID-19 related losses
  • It’s not a .50% higher mortgage rate
  • It’s an additional .50% of the loan amount via closing costs
  • Only applies to mortgage refinance loans backed by Fannie Mae or Freddie Mac
  • Home purchase loans are NOT affected by the new fee
  • Nor does it apply to FHA loans, USDA loans, or VA loans

Over the past week, I’ve been bombarded by articles warning of the new mortgage fee – most feature something to the effect of “refinance now” and “act fast!”

But in reality, you might not need to do anything different, nor hurry.

Sure, it’s an amazing time to refinance a mortgage, what with mortgage rates hovering at or record all-time lows. No one can argue that.

Still, it all seemed to come to a screeching halt two weeks ago when Fannie Mae and Freddie Mac surprised us with their Adverse Market Refinance Fee, which is designed to offset $6 billion in COVID-19 related losses.

Why would they do such a thing at a time when the economy (and homeowners) are already suffering due to COVID-19? Well, that’s a different story and not really worth getting into here.

The important thing to know is this new mortgage fee only applies to home loans backed by Fannie Mae and Freddie Mac, and only if you’re refinancing an existing mortgage.

It has nothing to do with FHA loans, USDA loans, VA loans, or home purchase loans. Or jumbo loans while we’re at it.

Additionally, they have since exempted Affordable refinance products, including HomeReady and Home Possible, and refinance loans with an original principal amount of less than $125,000.

Some single-close construction-to-permanent loans are also exempt.

In terms of cost, it’s .50% of the loan amount, not a .50% increase in mortgage rate. That could mean another $1,500 in closing costs on a $300,000 loan, which is nothing to sneeze at.

But mortgage rates don’t live in a vacuum, and can change daily, so how much more (or less) you’ll actually pay depends on what transpires between now and the implementation date.

When Does the New Mortgage Fee Go into Effect?

  • Applies to loans purchased or delivered to Fannie and Freddie on or after December 1st, 2020
  • This means you’d want to apply for a refinance 60 or so days before that cutoff
  • Since mortgages are sold and securitized once the loan actually funds
  • But remember there’s more to mortgage pricing than just this new fee

The fee was originally supposed to go into effect for loans purchased or delivered to Fannie and Freddie on or after September 1st, 2020, but after much uproar, they just delayed it to December 1st, 2020.

This doesn’t mean you have until December 1st to apply for a refinance in order to avoid the fee.

Since we’re talking purchase of your loan or delivery of your loan so it can be bundled into a mortgage-backed security, there needs to be a buffer.

We have to account for how long it takes to get a mortgage, plus the post-closing stuff that takes place before delivery or sale.

You’d really want to get your refinance in maybe 60+ days prior to December 1st to be safe, though it’s unclear if mortgage lenders will already start baking in the fee even earlier.

If not, you might be stuck paying an additional .50% of your loan amount, either via out-of-pocket closing costs or a slightly higher mortgage rate.

Assuming you don’t want to pay anything at the closing table, your interest rate might be .125% higher, all else being equal.

So if you qualified for a 30-year fixed mortgage rate of 2.5%, it might be 2.625% instead. On a $300,000 loan, it’s about $20 higher per month.

Sure, nobody wants to pay more, but it shouldn’t be a refinance deal breaker for most folks.

And here’s the other thing – mortgage rates might move lower over the next few months due to, I don’t know, COVID-19, the most contentious presidential election in recent history, a stock market that could collapse at any moment, and so on.

In other words, if mortgage rates drop another .25% or .375% by later this year, it’s possible to come out ahead, even with the new fee.

The counterpoint is not to look a gift horse in the mouth. Either way, don’t panic.


Top 6 Home Buying Risks To Avoid

June 22, 2019 Posted By: growth-rapidly Tag: Buying a house

Buying a home, especially as a first time home buyer, while can be an exciting time, can be a scary, stressful and expensive process. That’s why it’s important to be aware of the risks involved. By having an idea of what you may encounter when buying a home, you can take steps to avoid them. If you think you’re ready to buy a house, here are some home buying risks to avoid.

If you are interested in comparing the best mortgage rates through LendingTree click here. It’s completely free.

Check out: 5 Signs You’re Not Ready to Buy a House

If the process of buying a home seems complicated to you, it may make sense to speak with a professional. The SmartAdvisor free matching tool can connect you with up to three financial advisors in your neighborhood.

1. Obtaining the wrong mortgage.

The worst thing you can do when buying a house is to obtain the wrong home loan. A bad mortgage loan can be one with a high interest rate, which means that your monthly payments are higher. You also have to pay more in interest over the term of the loan.

The people who find themselves in this kind of situation are those who fail to shop for multiple mortgage lenders before deciding on one.

Not all mortgage loans are created equal. Mortgage rates and fees may differ from lender to lender. So to avoid this risk, you should plan to compare several mortgage rates. While the mortgage process can be overwhelming at times, you can navigate the process by comparing home loans side by side through LendingTree.

LendingTree: A Better Way to Find A Mortgage is making getting a mortgage loan simpler, faster, and more accessible. Compare the best mortgage rates from multiple mortgage lenders all in one place and at the same time. LEARN MORE ON LENDINGTREE.COM >>>

2. You don’t have any job security.

Another of the several home buying risks to avoid is to make sure you have a stable job with a steady paycheck so you can make your payments on time.

Unless you were able to purchase your home with all cash, you will need to make monthly mortgage payments to satisfy your loan requirements.

In addition, you will need to consider additional expenses, like money to replace the roof or to renovate the kitchen and bathroom. Therefore you will need a steady paycheck or stream of income.

So before you jump into homeownership, make sure you have a stable job.

Related: Apply for a Mortgage Loan Today

3. You forget about other costs.

First time home buyers may think that buying a house only involves finding and getting a mortgage loan, coming up with a down payment, making an offer on a house that they like, and preparing for closing.

However, they may not realize that there are other costs that come with buying a house.

In addition to the down payment and mortgage payments, they need to come up with closing costs, inspection costs, moving costs, maintenance costs, taxes, etc… And if you don’t consider and budget for these costs, you may be in hot water.

4. Buying a home full with problems.

You may have found a house you’ve always dreamed about. But it’s never good idea to purchase a home without conducting a building inspection.

A house inspection is crucial, because it can let you know of a lot of problems that you as a first time home buyer would have never thought existed.

It can reveal problems with the structure of the house, the roof, plumbing, electricity, etc.

Click here to compare mortgage rates through LendingTree. It’s completely FREE.

If you ignore house inspection and move in anyway, these issues can end up cost you a lot of money and can also be detrimental to your safety and well-being.

In conclusion, buying a home can be a fun and exciting experience. It can also come with unique challenges. By being aware of these home buying risks, you can take steps to avoid them.

More articles on buying a house:

The Biggest Mistakes Millennials Make When Buying a House

How Much House Can I Afford

5 Signs You’re Better Off Renting

10 First Time Home Buyer Mistakes to Avoid

Not All Mortgage Lenders Are Created Equally

When it comes to getting a mortgage, rates and fees vary. LendingTree allows you to view and compare multiple mortgage rates from multiple mortgage lenders all in one place and at the same time, so you can choose the best rates for your needs. LendingTree makes getting a loan faster, simpler, and better. Get started today >>>


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Good Financial Cents, and author of the personal finance book Soldier of Finance. Jeff is an Iraqi combat veteran and served 9 years in the Army National Guard. His work is regularly featured in Forbes, Business Insider, and Entrepreneur.