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MORTGAGE MISTAKES PEOPLE MAKE
Below are some of the more common mortgage mistakes people make when buying a home.

Utilizing the loan services of a company just because they quote you a low rate
If a mortgage company quotes a very low rate, there is the chance that they will not deliver what they promise. An old saying...if its too good to be true, it probably is. The plan of these low rate offering mortgage companies is to 'reel' you in and move the process along so quickly that there is no opportunity for you to back out. Once you are committed, various tricks will be used to raise the price of your mortgage.

 

The best thing you can do is to 'lock-in' your mortgage rate. Once you lock-in, the lender is guaranteeing the quoted rate. Learn more about mortgage rate locks.

Shopping multiple lenders over several days
The market changes every day. Quotes you receive on Tuesday are not going to be the same on Wednesday. Therefore, unless you obtain quotes from multiple lenders on the same day, you are not really doing smart rate shopping.

Getting mortgage quotes without giving the potential lender personal information that may influence your rate
Lenders all use different criteria when determining mortgage rates. Some factors are the loan amount, type of credit you have, size and location of house, your ability to prove proof if income and assets, etc.. If you do not provide your lender with accurate information, the actual rate you receive for your home loan is going to be very different than the mortgage rate you are quoted.

For example, suppose you tell your lender you are buying a single family home, when in fact you are really buying a condo. The rate you receive for a single family home is going to be very different than a condo.

**Buyer beware! Very often sellers will look to take advantage by lying about improvements that were made to their homes. This is called 'flipping fraud'. Learn more about other types of home buying scams.

Accepting a verbal quote without locking-in
You need to lock-in, period. A verbal quote is not a solid one. Rates go up and down all the time. If rates goes down from the time you start your mortgage to the time you close, you are going to pay more in mortgage interest over the life of the loan.

Not getting a letter of written confirmation of your mortgage interest rate lock

Not getting an agreement determining how a 'float' price is going to be determined at closing
It is common for individuals to allow the price of their home to 'float' (changing with the market) until closing. Lenders often tell borrowers that they will obtain the market price once they lock-in their rate. However, how market price is determined is not explained.

 

Ideally, the market price at your closing should be the final price if the loan was going to be utilized at that instant. Then, there is the price that is quoted when you lock in your rate. As long as interest rates do not rise, your should always save money when you flat since the float price is lower than the lock-in price.

However, if it is not determined and established how the market price is determined, you are likely going to lose money. Why? Because the lender can make up what the market price is.

Assume that a lender offering a good rate on one type of loan, will have equally good rates for another loan
Many home buyers will shop for one type of loan, only to change their mind and look for another. For example, suppose you are interested in a fixed rate loan, but then change your mind to wanting an adjustable. Or you shop for a 15 year loan, but then decide you want a 30 year loan. Regardless of what your situation is, it is not uncommon for a lenders to offer very different mortgage rates for the different loan programs they offer, some good and some bad.

Putting no money down
Leaving 0% as a down payment will likely result in you having to pay private mortgage insurance.

**Once you have obtained your loan, learn how to manage your mortgage.

Evaluating the Costs of Homeownership
Understanding the Housing Market
How Your Credit Report Effects Your Mortgage
Calculating Mortgage Payments
Determining How Much House You Can Afford With Your Salary



        

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