For most buyers, it’s pretty safe to say that a mortgage is the largest monthly expense they ever carry. Yet most people will do little or no preparation, shopping, or negotiation to get the best deal from the lender, which will make buyers end up paying more for their mortgage loans. Don’t let that happen to you, with the right information; you can get a loan at an affordable rate that will save your finances.
“For every 0.25 percent you can reduce your interest rate on a $200,000 mortgage, you’ll save $30.55 per month,” says Paul Sian, a real estate lawyer and Realtor with HER Realtors in Cincinnati. Now considering if the mortgage period is 30 years, you’ll save close to $10,998, which is a good amount of money.
4 worst mortgage mistakes committed by borrowers
1. Not comparing mortgage lenders
According to the Consumer Financial Protection Bureau, close to half of borrowers don’t shop around and that is a very worse mortgage mistake. You can either do your shopping or consider talking to a mortgage broker or loan officer, with whom you can share your personal financial information to order to get advice on reputable lenders with favorable interest rates.
2. Not reviewing your credit first
It is recommended that you review your credit at least six months before you go for a mortgage. You can credit a credit review from AnnuaCreditReport.com, the official site for free credit reports issued by the three biggest credit reporting firms: TransUnion, Equifax, and Experian. Usually, everyone is entitled to one free report per year. Besides you credit report, it is also important that you get your credit score. Most lenders now offer the popular FICO credit score.
3. Ignoring mortgage fees
When you are shopping around for the best lender, don’t ignore the mortgage fees. Many mortgages come with a lot of different kinds of fees. Unlike the recording fee, other kinds of fees such as loan origination fee, broker fee, application fee, and underwriting fee are all negotiable. Ask you lender to provide you with the total amount of fees applicable and see if you can negotiate a better price.
4. Not paying attention to mortgage terms
A good number of borrowers have lost their homes or even ended up paying more simply because they signed the mortgage forms without paying attention to mortgage terms. Understanding the mortgage terms should be your priority when shopping for a mortgage lender.