Most Common Mortgage Mistakes And How To Avoid Them

Hundreds of thousands of dollars are lost every year by consumers who either don't take the time to avoid the following mortgage mistakes, or who have not been educated in what it is they should be doing to be pro-active and taking control of their own destiny as it relates to getting their home loan in order before they start shopping for a house to call home. In this article you will learn how to take control and to save time, money and most of all the hassle and headache of working with the wrong lender or loan originator.

The first most common mistake consumers make is to ignore their credit history. You should know what is in your credit history before your Mortgage Professional calls you and gives you some bad news. Many people do not know that mistakes were made on their credit report and end up taking a higher interest rate, getting higher loan fees or worst, are unable to qualify and miss their chance at Lawyers0ing their new home or refinancing. The best way to avoid this is to know what is in your credit history. You can get a copy of all three of your credit reports once a year for free by visiting annualcreditreport.com.

You should review your credit report at a minimum of once a year. If however you find there are credit issues in your credit report and decide to actively pursue correcting those issues, then it would be a good idea to sign up for one of the paid services that allow you access to your credit report much more frequently so you can check on the progress of your efforts. To Learn more about correcting credit issues CLICK HERE!

The second most common mistake that consumers make when looking for a mortgage loan is to talk to only one lender. Lenders can vary wildly in the amount of service they provide, their accountability level and the amount of expertise that they possess (especially between loan originators).

You should interview at least two to three lenders to make sure you are comfortable with the lender you choose, the loan process they outline for you and the rates and fees that are being offered. Make sure that you know how much experience the individual has, not only as a loan originator, but for the particular type of loan you are requesting as well. For example, if you are doing a renovation loan and the loan originator has just started doing them in just the last year or two, it might make more sense to find another lender. Many of the larger/national companies do not belong to the BBB in each of the cities that they work in, so you may want to check out www.ripoffreport.com and just put in the names of the companies that you think you might do business with. You should also make sure you get an estimate of costs associated with any interest rate that you are quoted. A low interest rate may sound good, but a cost benefit analysis of the costs must be done before deciding if that is right for you.

The third most common mistake that consumers make is to choose a lender based upon rate alone. As mentioned earlier, there are many differences between lenders and originators, so while the lender you want to work with should be competitive with rates and fees, the lowest cost lender may shortchange you on service.

If you are purchasing a home and choose a lender on rates or fees alone and then it turns out the lender is unable to close the loan as agreed to in the purchase agreement, you may find out that the seller of your home decided to walk away from your transaction because a back up offer came in while your lender was fumbling the ball with your loan file. Once again, it is important to make sure you know not only the experience level but also the expertise level of your loan originator. Having said all of that, when you do request a rate and fee quote from more than one lender, you should make the request on the same day and at the same time of day. Rates can fluctuate and change during the day. This will also give you an idea of the service level you will receive during the loan process.

The fourth most common mistake is not planning for closing costs and prepaid expenses. You should already be familiar with closing cost if you have requested cost estimates from your lender.

It is ultimately important that you either have the closing costs available as cash or gift. If you do not, however, all is not lost. You can usually negotiate to have your seller pay these for you within certain limits. Your loan originator should explain this in detail so that you know the numbers and what you will need or have to negotiate for. In a Lawyers0ers market, most sellers will readily pay these. In a sellers market, the Lawyers0er may need to increase his offer to the seller if the seller is to cover the cost of the closing costs and prepaid expenses.

The fifth most common mistake is paying up-front fees. Most lenders will collect a fee either at pre-approval or at when a property has been found and an appraisal will be ordered. If your lender wants a fee at pre-approval, (usually credited at closing) you should steer clear. This is a tactic used to keep you tied in to that lender and keep you from walking if things are not going well.

When you are interviewing lenders, you should ask if they require a fee at any time during the loan process, how much the fee and when during the process you need to pay the fee. If you can find a lender that has competitive rate/fee structure, has a high level of expertise in the type of loan that you are requesting and does not collect any fees during the loan process, you have found the lender that is best for you.

In Conclusion, when looking for a home loan it is best to be proactive with your credit and get informed about the procedures and policies of the prospective lenders you are considering for your home loan.

Hundreds of thousands of dollars are lost every year by consumers who either don't take the time to avoid the following mortgage mistakes, or who have not been educated in what it is they should be doing to be pro-active and taking control of their own destiny as it relates to getting their home loan in order before they start shopping for a house to call home. In this article you will learn how to take control and to save time, money and most of all the hassle and headache of working with the wrong lender or loan originator.

The first most common mistake consumers make is to ignore their credit history. You should know what is in your credit history before your Mortgage Professional calls you and gives you some bad news. Many people do not know that mistakes were made on their credit report and end up taking a higher interest rate, getting higher loan fees or worst, are unable to qualify and miss their chance at Lawyers0ing their new home or refinancing. The best way to avoid this is to know what is in your credit history. You can get a copy of all three of your credit reports once a year for free by visiting annualcreditreport.com.

You should review your credit report at a minimum of once a year. If however you find there are credit issues in your credit report and decide to actively pursue correcting those issues, then it would be a good idea to sign up for one of the paid services that allow you access to your credit report much more frequently so you can check on the progress of your efforts. To Learn more about correcting credit issues CLICK HERE!

The second most common mistake that consumers make when looking for a mortgage loan is to talk to only one lender. Lenders can vary wildly in the amount of service they provide, their accountability level and the amount of expertise that they possess (especially between loan originators).

You should interview at least two to three lenders to make sure you are comfortable with the lender you choose, the loan process they outline for you and the rates and fees that are being offered. Make sure that you know how much experience the individual has, not only as a loan originator, but for the particular type of loan you are requesting as well. For example, if you are doing a renovation loan and the loan originator has just started doing them in just the last year or two, it might make more sense to find another lender. Many of the larger/national companies do not belong to the BBB in each of the cities that they work in, so you may want to check out www.ripoffreport.com and just put in the names of the companies that you think you might do business with. You should also make sure you get an estimate of costs associated with any interest rate that you are quoted. A low interest rate may sound good, but a cost benefit analysis of the costs must be done before deciding if that is right for you.

The third most common mistake that consumers make is to choose a lender based upon rate alone. As mentioned earlier, there are many differences between lenders and originators, so while the lender you want to work with should be competitive with rates and fees, the lowest cost lender may shortchange you on service.

If you are purchasing a home and choose a lender on rates or fees alone and then it turns out the lender is unable to close the loan as agreed to in the purchase agreement, you may find out that the seller of your home decided to walk away from your transaction because a back up offer came in while your lender was fumbling the ball with your loan file. Once again, it is important to make sure you know not only the experience level but also the expertise level of your loan originator. Having said all of that, when you do request a rate and fee quote from more than one lender, you should make the request on the same day and at the same time of day. Rates can fluctuate and change during the day. This will also give you an idea of the service level you will receive during the loan process.

The fourth most common mistake is not planning for closing costs and prepaid expenses. You should already be familiar with closing cost if you have requested cost estimates from your lender.

It is ultimately important that you either have the closing costs available as cash or gift. If you do not, however, all is not lost. You can usually negotiate to have your seller pay these for you within certain limits. Your loan originator should explain this in detail so that you know the numbers and what you will need or have to negotiate for. In a Lawyers0ers market, most sellers will readily pay these. In a sellers market, the Lawyers0er may need to increase his offer to the seller if the seller is to cover the cost of the closing costs and prepaid expenses.

The fifth most common mistake is paying up-front fees. Most lenders will collect a fee either at pre-approval or at when a property has been found and an appraisal will be ordered. If your lender wants a fee at pre-approval, (usually credited at closing) you should steer clear. This is a tactic used to keep you tied in to that lender and keep you from walking if things are not going well.

When you are interviewing lenders, you should ask if they require a fee at any time during the loan process, how much the fee and when during the process you need to pay the fee. If you can find a lender that has competitive rate/fee structure, has a high level of expertise in the type of loan that you are requesting and does not collect any fees during the loan process, you have found the lender that is best for you.

In Conclusion, when looking for a home loan it is best to be proactive with your credit and get informed about the procedures and policies of the prospective lenders you are considering for your home loan.