12 Deadly Mistakes When Applying for a Mortgage

1. Not Knowing How Much Money You Can Put Down

It's important to know how much you have set aside to pay towards your down payment and closing costs when you apply for your mortgage. The more you put down the better rates and terms you're likely to get. At the same time you also need to stay within your family budget and comfort level. Your Mortgage Broker can offer a variety of loan products to you that could allow a zero down payment if your credit score is within the acceptable range for these programs.

2. Working With A Mortgage Broker Who Has A Poor Performance Record

It is important to know the track record of your Mortgage Broker. Do not be afraid to ask your mortgage broker about her/his performance guarantee, and can they supply a list of references. Often times the Broker will list some client testimonies on their website.

3. Not Understanding The Process

Most of us don't shop for a mortgage very often. As a result it isn't something we become familiar with. Work with a mortgage broker who will take the time to answer your questions and uses terms you understand. You should feel comfortable with your Mortgage Broker and know you can trust what they say. As a Mortgage Broker, I am looking to build quality relationships with my clients’ not just make a quick dollar.

4. Working With A Lender who has Only One Investor

Not all Mortgage Brokers have a range of options when it comes to investors. What if that investor doesn't offer the type of mortgage you need? Or worse yet, what if you need to change loan products after you've started the process? Working with a Mortgage Broker who has many investors enables you to address these issues without starting the process over again. You should be working with a Broker that has several investors in both the conforming and nonconforming loan market.

5. Making Large Purchases Prior to Your Mortgage Application

Many people think that it is in their best interest to get large purchases completed prior to applying for their mortgage. As total debt is a key component in determining the amount of home you qualify for, it is best to wait until after your home purchase has closed to make such purchases.

6. Over Shopping Your Loan

Each time you call a lender seeking the best possible rate and terms you have your credit report pulled. Every time your credit report is pulled you risk decreasing your credit score and thus possibly decreasing the likelihood of getting the best rate and terms. Experts recommend that you select a mortgage broker with a number of investors and do your shopping with her/him. This will limit the number of times your credit is accessed and your credit score will not be degraded.

7. Hiding Things From Your Mortgage Broker

Most of us have experienced times of financial difficulty at some point. While it can be embarrassing to discuss issues like this, your mortgage broker is there to help you get your loan approved despite such issues. Your mortgage broker can only help you through these problem areas if they are aware the problems exist. You will want to work with a Broker that is honest with you and the Broker will want the same from you. Often time people think that they are the only one that has had this type of problem and this is just not the case. The Broker can help sort out the situation and find the best deal given your set of circumstances.

8. Making Late Payments

Late payments, especially those within the last year, can be very detrimental to
getting the best rate, terms and even the difference of being approved at all. While this might seem like unnecessary advice, ALWAYS pay on time, especially your mortgage or for a renter, you’re monthly rent payment.

9. Over Using Credit Cards

Credit cards are a convenient way to make purchases, but if your balance is not paid off or your balances kept low you might find it more difficult to get the best rates and terms on your mortgage. Keeping your total debt as low as possible helps you get the mortgage that best meets your specific needs. A rule of thumb is your credit card balances should not be greater than one half of the credit limit. Following this rule will help your credit score and save you thousand in mortgage interest payments.

10. Cosigning On Someone Else's Loans.

While it can be a great service to a friend or loved one, signing to guarantee
someone else's loan is often a big headache for the cosigner. Before cosigning you need to decide if you're willing and/or able to assume the debt if the person you cosigned for does not make the payments. Most lenders will require 12 – 24 months of cancelled check from the person that is responsible for the loan to prove that you are not making the payments. This is very important because you will not want the debt to be counted against you when approving your loan. This could mean the difference between having a loan approved and not getting the loan at all.

11. Not Getting All The Facts

It is important to learn the total cost of your mortgage loan, both at closing and for the life of the loan. While mortgages can look a lot alike there can be subtle differences, which can save or cost you thousands of dollars. Get all the facts and know what to expect at the closing table.

12. Not Continuing to Make your Payments

A common mistake that borrowers make when refinancing a mortgage loan is that they stop make the payments on the loans that will be paid off. You should always check with your Mortgage Broker regarding the timing of the payments on your existing loans. If you have worked hard to maintain a strong credit score, don’t ruin that during a refinance.

bob.bradshaw@lakewoodhome.net

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