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321-239-2781NMLS # 1922428
321-239-2781NMLS # 1922428
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Wouldn’t it be great if life came with a manual? Unfortunately, many of us learn life’s lessons the hard way – by experiencing them! Fortunately for homebuyers, there are some rules that can help avoid major pitfalls when buying a home or refinancing a mortgage.

Let’s take a look at 7 mistakes that can have a detrimental effect on your mortgage.

#1 Not shopping around

Too many people go to their local bank or other financial institution for their mortgage and never shop around.  As a result, they end up paying more over the life of the loan because they don’t realize what they could have had.

Consider speaking not only to your financial institution but also to a mortgage broker who has access to dozens of markets and hundreds of programs to fit just about every need.

#2 Not shopping around for a mortgage broker 

Your realtor may recommend a friend who will take care of you, but as with everything, all brokers are not created equal. Be sure the person who is giving the recommendation is a mortgage professional who is knowledgeable and has an array of products and programs to offer that will fit your specific circumstances.

#3 Buying too much house 

How many square feet do you need? How much can you afford? Don’t get yourself into a situation where you have too much house that you can’t afford over your lifetime. Remember, it’s not just the monthly payments you have to worry about. Consider property taxes, insurance and heating and cooling costs as well.

#4 Getting into the wrong mortgage 

A quick scan of the newspapers will show you a lot of people who have gotten into the wrong mortgage. Make sure you know the differences between fixed and adjustable rate mortgages and seek the help of a trusted third party to help you make the right decision. You don’t want to have to refinance in the short term, as that will just eat up the equity in the property. Be sure to review the prepayment penalties as well. Why should you be penalized for paying off your loan ahead of time?

#5 Not taking care of your credit score

Clean up your credit and don’t make any big purchases right before you intend to take out a mortgage. Thinking about buying a new car or TV? Well, save it for after you have signed your home loan paperwork.

#6 Missing out on programs for first-time homeowners 

Many first-time homeowners don’t take advantage of programs and discounts available to them. Look into local, state and federal programs that can help reduce your interest rate and potentially negotiate better terms.

Fannie Mae and Freddie Mac have lots of programs for first-time homebuyers as long as you qualify for them. One example is NACA. Click here for more info on that.

#7 Supplying inaccurate information

Don’t try to fool the lender. It’s not worth it. Make sure you have supporting documents for everything you put down on the mortgage application. To add to that, never sign a mortgage document in which the lender hasn’t completely filled out all of the fields. Insist on honesty on both sides of the desk!

#8 Not locking in the rate

Volatility in the market can cause interest rates to jump all over the place. Rates can change in the blink of an eye. Get your rate locked in and don’t wait around until the last moment. Don’t forget to get your rate in writing with the complete terms spelled out from your mortgage lender when you lock it in.

#9 Not considering the other “charges” in your mortgage

Sure, you got a great rate on your mortgage, but did you carefully read about the other charges the lender has stuck in? Rates are important, but make sure you understand the full cost of your loan. Read and question all the charges listed.  You might have to pay a quarter of a percent more by going somewhere else, but after you add up all the fees, you may find that going to a lender with a slightly higher rate can actually save you money.

Looking for Help with Your Loan?

Learn more about David A. Krebs here.