The decision to buy a house is one of your biggest financial decisions. For many, the financing process is a major source of stress. A mortgage application can seem overwhelming or confusing if you don't do enough research. Avoid these common mistakes to make your mortgage process easier and less stressful.

Understanding The True Cost Of Homeownership Is Difficult

You are probably familiar with the monthly costs of renting. This usually includes your rent payment and some utilities. You will be responsible for any additional monthly expenses that your landlord did not cover as a homeowner. This includes water, sewer, and garbage bills, monthly HOAs if you are buying a condo and lawn care costs. Property taxes and homeowners insurance will also be due. Don't forget about maintenance costs. To cover maintenance and repairs, it is recommended that you save 1-3% of the home's purchase price each year.

Assuming You Won't Qualify

Renters often believe they cannot afford to purchase a house since they don't have enough money to save 20%. However, you might be surprised at the potential house you could buy based on your rent each month. Try plugging some numbers into an affordability calculator to get a better sense of what you need -- and how much you have. Or, you can talk to a lender and find out what you might qualify for.

Although 20 percent is the ideal down payment, it's not necessary. Loan programs cater to first-time homebuyers, such as the FHA loan, which allows for down payments of as little as 3.5%. Down payments for conventional loans can be as low as 3%. In addition, certain loans, like VA loans for veterans or military and USDA loans for rural buyers, don't require any down payments.

Pre-Qualification At The Last Moment

Many first-time buyers wait until they've found a home they want to buy before talking to a lender, but there are many benefits to getting pre-qualified early. Pre-qualification allows you to shop within your price range, act quickly when you find a home you like, and catch any errors in your credit report before they affect your loan. In addition, you could save thousands over the long term because an error in your credit report could lead to a lower credit score and a higher interest rate.

Talking To Only One Lender

Many home buyers choose a lender recommended by a friend, relative, or agent and don't bother looking around. However, this doesn't guarantee that you will get the best rate or find a lender who has experience with loans in your situation. To get the best loan, it is recommended that you speak to at least three lenders.

While it is not necessary, most home-shoppers end up getting a loan through a lender that pre-approved them. Therefore, it's a smart idea to start researching lenders before you apply for a loan.

Spending Your Entire Budget

A pre-approval letter or pre-qualification letter will usually include the maximum amount they will lend to you. However, just because a lender allows you to borrow a certain amount does not mean spending it.

Lenders have certain rules that they use to decide how much they can borrow. For example, the 28/36 rule states that homeowners should not spend more than 28% of their gross monthly income for housing expenses and less than 36% on overall debt. However, buying a home comes with substantial upfront costs such as closing costs and the down payment. Therefore, you'll need to ensure that you have enough savings for unexpected expenses and emergencies after you close.

Not Researching Down Payment Assistance Programs

For first-time homebuyers, the greatest obstacle to homeownership is saving for a downpayment. Did you know that there are thousands upon thousands of programs to help with down payments in the United States?

These programs often offer grants or second or third mortgages, or "soft" loans that allow for deferred payments and zero interest rates. Ask your lender or real estate agent if they know of any programs that may be available in your area. You can also search for down payment assistance programs on sites like the Down Payment Resource Center.