Biggest Mortgage Mistakes
Even if you're not a first-time homebuyer, you still may be susceptible to these common mortgage mistakes. Here are the biggest no-no's and how to avoid them.1. Not Researching Programs for First-Time Homebuyers.
The government and many lenders offer a variety of special programs for first-time homebuyers. These programs are intended to cater to a wide gamut of homebuyers, including those with poor credit or little to no cash for a down payment. You can research what programs are available to you by calling different lenders and government housing departments. The Internet is also a great place to look. You'd be surprised how many different types of mortgage loans are available for people buying a home for the first time.
2. Underestimating the Importance of Credit.
The biggest determinant of the interest rates on mortgage loans is the credit of the borrower. Your credit score will be the first thing your lender looks at before even thinking about issuing you a mortgage loan. A poor credit score could get your application rejected or your interest rate drastically inflated. You can head your lender off at the pass by looking at your credit report before you apply for your mortgage. That way, you can correct any errors you find, and, if your credit needs a lot of work, you can take some time to improve it before applying.
3. Over-borrowing.
If you have a decent credit score, you will more than likely get approved for a mortgage loan that is far beyond what you actually need or can afford. When buyers qualify for larger mortgage loans, they are often tempted to take the bigger loan and buy more house than they had originally planned. However, you have to remember that you shouldn't base how much you borrow on how large of a loan you can get. You should borrow only what you need and can afford to fit into your monthly budget.
4. Not Comparing Different Lenders.
One surefire way to get a raw deal on mortgage loans is to get an offer from only one lender. As with any product, you have a better chance of getting a competitive offer when you shop around. Some lending experts advise homebuyers to get quotes from a minimum of two or three lenders before committing to a mortgage loan. Thanks to our site, this is easier than ever because you can do all of your comparison shopping in about five minutes by filling out our free sign-up form. We'll give you a minimum of four quotes on home mortgages from our certified lenders. Best of all, we put our lenders' offers side by side, so they are forced to compete for your business.
5. Not Reading over All of the Paperwork.
You know the phrase the devil's in the details? With mortgage loans, the devil's in the fine print. You should be well aware of what you're signing before you put your John Hancock on those forms. Read them over carefully and ask your lender whatever questions you may have. If you see terms or charges that seem unreasonable, don't hesitate to object.