6 Mortgage Mistakes to Avoid


Credit Report

Going to a lender without knowing what’s in your credit report isn’t a great way to put your best foot forward when getting a mortgage. Lenders will scour through your credit report and will base their decision how creditworthy you are. Don't make this mistake -- make sure you pull your credit report from all three bureaus (you get one free report each year) as you can lose money or you may not get the home of your choice.

(Image via Shutterstock)


Multiple Applications

The phrase "the more the merrier" doesn't apply when it comes to mortgages. More applications doesn't give you a better chance of finding a great mortgage.

In fact, this type of applicant may be seen as "high risk," due to the amount of applications are out there simultaneously. If you are looked at as a risk, you are more likely to receive a higher mortgage rate.

(Image Via Flickr)



Shop Around

Find a mortgage lender early on to build a relationship with them so they can assist you with obtaining the home of your dreams. Even though interest rates and loan terms are the same across the board, other costs and fees may not be.

Find out what incentives they offer. Some may offer cash back at closing, but another lender may not. Look for at least two or three lenders when shopping for a mortgage.

(Image Via Flickr)


Missing Out On Pre-Approval

The pre-approval process consists of verifying income and filling out documents in the hopes that you will be approved for a loan that will best suit the house you choose. This is a great way to see what you can expect, such as how much your interest rate will be.

This makes the overall application process easier and it shows a seller that you’re serious.

(Image Via Flickr)


Understand Loan Documents

Most people simply don’t ask enough questions. Make sure you fully understand what kind of loan you’re getting.

Remember, a mortgage is more than just making the monthly payment on time. It includes how much will be paid over the life of the loan and interest. Let’s say you have a 3/1 adjustable rate mortgage where the first three years of payments are fixed. After this point, the remaining interest on the loan adjusts yearly. Your interest rates can fluctuate in three years.

Read everything carefully because you may not have much time during the final stages of closing to take in all of the information.

(Image Via Flickr)


Big Loans

Mortgage lenders are approving people for loans that they can’t truly afford.

If you go this route you may face the risk of foreclosure, which can adversely affect your credit. You should find out ahead of time what your payments would be for a 30-year fixed rate mortgage on a house. Be sure to stick to your budget and make sure you can truly afford the home you are interested in buying.

(Image Via Flickr)