If you are looking to buy a home AND you are planning on using a mortgage, this article will shed a little light on some common mortgage mistakes…
I should not have to remind you that buying a house is a HUGE financial decision and will have a significant impact on the rest of your life.
Sometimes I am amazed at how people rush the home buying process before they educate themselves about mortgages and financing. Since an informed and educated consumer is an empowered consumer, it really blows my mind. Plus, not making the best mortgage choice could result in paying much more than you need to.
So if you want to save your hard earned money, here are a few common mistakes to avoid:
Not So Perfect Timing
I hate to break it to you but trying to time locking your mortgage rate might backfire on you. Too many people wait to lock in their mortgage rate because they think that mortgage rates have not hit bottom. Sadly, this usually means they have waited too long and wind up with a higher interest rate.
Does this mean you can’t keep a very close eye on economic indicators so you get a better rate. Of course not! The key is to not be afraid to lock when your trusted lender advises you to do so!
A Nasty Surprise
Another mistake some buyers make is they forget about closing costs. When you are getting a mortgage, you have to remember that you need closing costs as well as your down payment. Closing costs vary depending on what type of mortgage you are using, your credit and much more. They can range from 2% all the way up to 6% of the loan.
Again, your mortgage lender should discuss this with you at the beginning of the loan process. Just remember to budget this in advance so that you don’t have a nasty surprise.
Considering All Your Options
There are many different types of mortgage available today. That does not mean they are all the right choice for you. But you need to research and talk to your lender about what options you have. Discuss the pros and cons of each.
Mabye you have heard only the bad stuff about a certain type of mortgage. You may not understand exactly how a particular type of mortgage works. You may not know all the pros and cons for each type of mortgage. This might mean you miss out on a type of mortgage that could save you money.
Just do your research so you understand all of the different mortgages that are available today.
Focusing Only on the Mortgage Rate
I cannot tell you how many times I have heard horror stories about buyers falling for the old bait and switch. They see a lender advertising super low rates and fail to read the fine print.Which means they end up paying much more than they should!
You need to realize that the mortgage interest rate is only one thing to consider when choosing a mortgage. There are other things that are just as important such as how long it takes the lender to close, restrictions on lump sum payments and any other important factors.
The Take Away
First of all, I am a REALTOR® and I am providing this to you for informational purposes only! I am not a mortgage lender and you should contact the lender of your choice directly to learn more about its mortgage products and your eligibility for such products.
When I have a question about mortgages, I contact one of my trusted mortgage professionals. And I suggest that you do the same!
With that being said, if you avoid these common mistakes people make when choosing a mortgage, you are going to have a much less stressful home buying experience. Plus you should save some money!