What to avoid when applying for a mortgage
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Obtaining a mortgage may be the most rewarding thing you will ever do because it allows you to buy a home. Let’s face it, not everyone is able to buy a home in their lifetime.
Unfortunately, many homeowners discover that a mortgage can be one of the worst things in their life because they cannot afford the high monthly payments and become delinquent, thus seriously damaging their credit. Or they make the monthly payment, later discovering that they could have saved thousands of dollars.
“Deadly Pitfalls To Avoid When Applying For A Mortgage” is an article posted on mortgage-listings.com and written by Craig Romero, which lists a few things to avoid when applying for a mortgage.
The most important thing you should avoid before applying for a mortgage is being uneducated about the terms, process, etc. Not understanding the process and what the terms and interest rates mean leaves you vulnerable to be taken advantage of and end up paying too much for your loan.
Do not deal with a second-rate mortgage company. “ As a mortgage Analyst, I can’t stress how important it is to research your mortgage company before dealing with them. Don’t be afraid to ask any questions you feel necessary. Be sure and ask for references. Make sure they have satisfied customers. Be sure to ask what percentage of their mortgage applications is denied. If more than 10% of their loans are never funded, look elsewhere,” Romero said.
Also, do not deal with a lender who funds their loans through only one investor. There are so many different kinds of loans, or products, available for people with a variety of financial needs, choosing a lender with a limited number of products ends up limiting what kind of mortgage you can borrow.
Make sure that you are comfortable with your down payment. The benchmark for a down payment is 10 percent.
However, if you put down at least 20 percent you will not have to pay for monthly mortgage insurance. This would eventually save you thousands of dollars. But most people do not have the money for a 20 percent down payment.
Even though a larger down payment will result in lower monthly payments, you do not want to put yourself in a financial bind by putting down too much.
You will want to avoid making large credit card purchases before applying for a mortgage. “Since the amount of debt you have is calculated in determining how much of a home you qualify for, be sure not to make any large credit purchases before applying for a mortgage.”
You should also avoid shopping for a quote with too many lenders. “In order for a mortgage company to give you an accurate quote, it’s necessary for them to pull your credit report. If your credit report is pulled more than 2-3 times in a six-month period, you risk decreasing your credit score. This in turn could keep you from obtaining the best possible rate and loan term.”
Lastly, try to avoid not using common sense. Basically, just have general knowledge about everything you expect to encounter when applying for a loan.
