So you want a mortgage loan but you don’t have a plan? One of the first blunders that are damaging to everyone is not thinking about your future plans. The things you do today could have a great impact on acquiring a mortgage loan next year or even 5 years down the road. Here is a list of some common mortgage blunders that could derail your game plan.
1.Co-signing On Someone Else's Loan
You could become a great friend or even a hero to someone by doing this. Before you do, ask yourself. Are you willing to assume that liability? Are you willing to forego getting your own home to co-sign? Those could be the ramifications.
2.Making Late Payments
Late payments tell a story to the next creditor; will you pay their loan on time? It’s very difficult to qualify for the best terms and rates if you have late payments. It may even keep you from qualifying at all. It might seem unnecessary to say, but always pay on time and when you can’t, call to ask for extra time.
3.Over Using Credit Cards
Yes credit cards are convenient, but if the balances are not kept low or paid off it may make getting the best rates and terms on your loan more difficult. And if you’re thinking about applying for a loan soon, do not take on new debt. Whenever you apply for new credit, you're seen as a greater credit risk, at least initially. If you happen to apply for a credit card or auto loan around the same time you apply for a mortgage, your credit score might get dinged enough to kill your eligibility or bump up your interest rate.
4.Underestimating Your Total Housing Payment
A mortgage payment consists of principal, interest, taxes, and insurance (The PITI). A common mistake made by prospective home buyers is not factoring in the property taxes, HOA fees and insurance premium into the overall mortgage budget.
5.Not Shopping Around
Just because you're pre-approved with one bank doesn't mean you need to obtain financing from them. Be sure to shop around with multiple banks and lenders and even consider a mortgage broker. A broker can shop your rate with a number of banks concurrently and find you the lowest rate with the best terms. Comparison shop just like you would for anything else you buy.
6.Choosing a Lender Based on Their Low Rate
Your mortgage rate is an important factor with your loan. Remember that it is only one of several factors. You also need to keep in mind the APR and the fees.
There are many factors to consider when applying for a mortgage. Take your time and seek the best advice possible from both your realtor and loan officer.
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