The Biggest Mortgage Mistakes

Much is involved when shopping for a home.  If you know this is something you will be doing in the near future; doing a little homework can prove to be quite beneficial. One major step in the quest to home ownership is obtaining a mortgage. A home loan is the biggest debt and monthly expense most of us will ever have. Avoiding the mistakes below when shopping for your mortgage will save you money and aggravation.

Common Mortgage Mistakes

Not using a Mortgage Advisor

Finding the right combination of a low mortgage rate and reasonable fees can shave thousands of dollars off your closing costs and monthly payments. But you’ll never know whether you got a great deal if you go straight to the bank for your loan.  Take advantage of a professional mortgage advisor who will present you with a few different options to best suit your needs.  They will shop on your behalf for the best rates available to you.

Applying for a loan without checking your credit reports for errors

Three out of every four credit reports contain erroneous information that can make it more difficult to qualify for a loan or obtain the best possible interest rate. Legally you are allowed a free credit report from each of the three major credit reporting bureaus, available at AnnualCreditReport.com. We recommend requesting one report every 4 months. Since there are three major bureaus; this allows you to keep tabs on your credit year round.

Not getting preapproved for a loan

An important ‘free’ reality check is having your lender look at your credit history, income,
savings and debts to determine how much you’re qualified to borrow. If you can’t get
preapproved, or can’t get preapproved for as much as you want to borrow, that’s a big red flag.

Saddling yourself with payments you can’t afford

Looking at all of your bills realistically and decide how much you can comfortably spend. Include an estimate for taxes, insurance and condo or association fees. From that, calculate the
amount that could be borrowed at prevailing mortgage interest rates. Add the size of the down payment and run these numbers through a home mortgage calculator for the price you can afford.

Not having a rainy day fund

Moving in to a new home is expensive and you’ll need money to buy everything from furniture
and curtains to lawn mowers and ladders. Home repairs aren’t cheap either. You should also be
able to cover at least six months of living expenses, so that you won’t default on the mortgage if
you get laid-off or become ill and can’t work.

Ignoring state programs for first-time home buyers

Virtually every state offers some sort of assistance for first-time buyers. From low-cost
mortgages to down payment assistance and tax credits, these programs can lower monthly
payments, provide cash for closing and help you seal the deal.