Mistakes to avoid when getting a mortgage
The National Association of Responsible Loan Officers (NARLO) recently convened to discuss some of the most common mistakes that are made when people attempt to obtain a mortgage. Here are 3 of those mistakes and how you can avoid them!
Mistakes to avoid when getting a mortgage #1: Trying to hide past financial difficulties
One of the important services a responsible loan officer offers is helping you overcome past financial difficulties that may hinder your ability to have your loan approved. Supply the information that will help your loan officer provide you with the most suitable rate and terms and minimize the impact of your past credit history. The fact that you have recovered from past financial problems makes you a better risk that others who haven't yet faced these challenges. Overcoming past financial difficulty proves that you honor your commitments and don't give up.
Mistakes to avoid when getting a mortgage #2: Borrowing more than you can repay
All of us understand that we may have to stretch our monthly budgets a bit to afford the homes we want. However, you will put your entire financial well being in jeopardy by buying a home you simply cannot afford. If you buy an expensive home and find you cannot make the monthly payments, you could face a huge loss when you have to sell that home quickly to get out from under your mortgage. Or worse, you could be forced into foreclosure or bankruptcy. It is much better to be patient, buy a home you can comfortably afford, make payments, build equity and then transition into a larger home after a couple of years. Yes, the larger home will cost more then, but the home you purchased will also have appreciated during that time. Most importantly, you will have built a successful financial foundation that allows you to experience all of your dreams, including that dream home.
Mistakes to avoid when getting a mortgage #3: Relying on interest rate advertising
Some loan officers use interest rates to get your attention; however, they may actually end up costing you more. Such rates are often derived by using a 30-year mortgage coupled with an accelerated payment plan. You may decide you like that option, but you cannot directly compare the interest rate on that mortgage to other opportunities. This loan could cost more than other mortgages with seemingly higher interest rates. It is critical to find a loan officer you can trust to review the options available to you and the best possible rates for your financial situation. Only a responsible loan officer can give you all of your options in an understandable way.