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Nine mortgage mistakes
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The original author is not known. It is not our intention to infringe upon copyrighted material. If you are the original author of any of these articles, please let us know so that we may provide
appropriate credit. All articles come from out side sources and should be credited accordantly. The information presented was taken from a open, no cost public venue and release in the same
manner.
appropriate credit. All articles come from out side sources and should be credited accordantly. The information presented was taken from a open, no cost public venue and release in the same
manner.
Nine mortgage mistakes
You are about to make what will most likely be the largest transaction of your life: your home mortgage.
Unfortunately, many home buyers do not take the time to research some of the little but weighty
intricacies of mortgages. Researching the mortgage process takes little time compared to the tens of
thousands of dollars it could save you.
Doesn’t it make sense to become as completely informed as possible before you buy your next home?
This special report is designed to help you avoid nine common mistakes. Remember that the right lender
can help you make good, sound business decisions based on your personal financial situation.
1. Find a Reputable Lender - This is the most important choice you can make when starting the
mortgage process. If you don’t trust your lender, you are in for a long and stressful home-buying
experience.
2. Pricing - Don’t be lured into a mortgage company strictly by promises of low rates. Find out
how long the advertised rate is guaranteed for. Make sure there is enough time to close on your loan.
Some companies may make these "promises" but will try changing the rate prior to closing. They may
claim that your "lock-in" rate has expired so make sure you have the expiration date in writing. In some
cases, the lender may even try to delay your closing to break the "lock-in" rate. In other cases the delay
may be beyond the lender’s control. Make sure to allow yourself plenty of time for closing. Delays in
the process are common and everyone (builders, title companies, even yourself) is responsible.
3. Programs - You will see several programs that offer special low-interest rates. Keep in mind that
they may not be the best program for your situation. Make your lender explain what programs they feel
best serve your needs and more importantly, why.
4. Fixed or Adjustable Rate Mortgage (ARM) - Conventional thinking is that fixed is always better
and while this is sometimes true, it is not always the case. The key here is to ask, "How long am I going
to live at this property?" An ARM can actually be a better choice if you are going to be in the home for a
short time. The average for how long a first time homebuyer keeps their mortgage is less than four
years. In general, the longer you plan on staying in your home, the better a fixed rate mortgage will suit
your needs.
5. Don’t try to bottom out the market - Deciding when to lock in to a mortgage rate can be
difficult. Many people will float, trying to guess when rates have hit bottom. Unfortunately, a lot of
times they will wait too long and end up with a much higher interest rate. There is nothing wrong with
floating but keep a close eye on economic indicators. Your daily newspaper or even the nightly news
can be an excellent source of information on the latest interest rate activity. As closing nears, it might be
worth locking in.
6. Negotiate problems prior to closing – Its common for a problem to arise before closing. Waiting
until closing will rarely be in your best interest. For instance, if you accept $400 at closing in lieu of the
seller making a repair and after closing you find that the repair will actually cost $600, you’ve obviously
made a poor decision. Whether the builder agreed to add an item and has not or the seller has made a
repair that is not acceptable to you, discussing a solution prior to closing will give both parties time to
analyze and determine options.
7. Be prepared for closing costs – In addition to the down payment, you will be required to pay
fees and other closing costs at the time of the final transaction. Closing costs typically range from 2
percent to 6 percent but will be dependent upon your situation. Lenders must provide you with a "Good
Faith Estimate." The "Good Faith Estimate" will breakdown all costs so that you may know what to
expect at closing.
8. Close at the end of the month – When making a mortgage payment, you will be paying interest
that has accrued from the previous month. Upon closing however, your lender will charge you prepaid
interest for the date the loan is recorded through the end of that month. Therefore, one way to lower
your closing costs is to close in the latter part of the month. This will lower the amount of prepaid
interest that you must pay.
9. Look out for hidden fees -- Check for certain miscellaneous fees such as inspection, notary, and
document preparation. These types of fees can mean hundreds of dollars in closing costs. Remember
that this is your money at stake. Never should you be afraid to ask for explanations of fees you are being
charged.
Unfortunately, many home buyers do not take the time to research some of the little but weighty
intricacies of mortgages. Researching the mortgage process takes little time compared to the tens of
thousands of dollars it could save you.
Doesn’t it make sense to become as completely informed as possible before you buy your next home?
This special report is designed to help you avoid nine common mistakes. Remember that the right lender
can help you make good, sound business decisions based on your personal financial situation.
1. Find a Reputable Lender - This is the most important choice you can make when starting the
mortgage process. If you don’t trust your lender, you are in for a long and stressful home-buying
experience.
2. Pricing - Don’t be lured into a mortgage company strictly by promises of low rates. Find out
how long the advertised rate is guaranteed for. Make sure there is enough time to close on your loan.
Some companies may make these "promises" but will try changing the rate prior to closing. They may
claim that your "lock-in" rate has expired so make sure you have the expiration date in writing. In some
cases, the lender may even try to delay your closing to break the "lock-in" rate. In other cases the delay
may be beyond the lender’s control. Make sure to allow yourself plenty of time for closing. Delays in
the process are common and everyone (builders, title companies, even yourself) is responsible.
3. Programs - You will see several programs that offer special low-interest rates. Keep in mind that
they may not be the best program for your situation. Make your lender explain what programs they feel
best serve your needs and more importantly, why.
4. Fixed or Adjustable Rate Mortgage (ARM) - Conventional thinking is that fixed is always better
and while this is sometimes true, it is not always the case. The key here is to ask, "How long am I going
to live at this property?" An ARM can actually be a better choice if you are going to be in the home for a
short time. The average for how long a first time homebuyer keeps their mortgage is less than four
years. In general, the longer you plan on staying in your home, the better a fixed rate mortgage will suit
your needs.
5. Don’t try to bottom out the market - Deciding when to lock in to a mortgage rate can be
difficult. Many people will float, trying to guess when rates have hit bottom. Unfortunately, a lot of
times they will wait too long and end up with a much higher interest rate. There is nothing wrong with
floating but keep a close eye on economic indicators. Your daily newspaper or even the nightly news
can be an excellent source of information on the latest interest rate activity. As closing nears, it might be
worth locking in.
6. Negotiate problems prior to closing – Its common for a problem to arise before closing. Waiting
until closing will rarely be in your best interest. For instance, if you accept $400 at closing in lieu of the
seller making a repair and after closing you find that the repair will actually cost $600, you’ve obviously
made a poor decision. Whether the builder agreed to add an item and has not or the seller has made a
repair that is not acceptable to you, discussing a solution prior to closing will give both parties time to
analyze and determine options.
7. Be prepared for closing costs – In addition to the down payment, you will be required to pay
fees and other closing costs at the time of the final transaction. Closing costs typically range from 2
percent to 6 percent but will be dependent upon your situation. Lenders must provide you with a "Good
Faith Estimate." The "Good Faith Estimate" will breakdown all costs so that you may know what to
expect at closing.
8. Close at the end of the month – When making a mortgage payment, you will be paying interest
that has accrued from the previous month. Upon closing however, your lender will charge you prepaid
interest for the date the loan is recorded through the end of that month. Therefore, one way to lower
your closing costs is to close in the latter part of the month. This will lower the amount of prepaid
interest that you must pay.
9. Look out for hidden fees -- Check for certain miscellaneous fees such as inspection, notary, and
document preparation. These types of fees can mean hundreds of dollars in closing costs. Remember
that this is your money at stake. Never should you be afraid to ask for explanations of fees you are being
charged.