Getting a mortgage can be a complex process. If not done correctly, you could run into qualification problems. It may even cost you thousands of dollars on a new home purchase. To avoid any complications, here are 4 common mortgage mistakes most people make, as well as tips and advice on how to avoid them.
Mistake #1: Assuming that all mortgages are the same.
Many people assume that all mortgages are the same. The fact is, there are different types of mortgages falling into several major categories. These categories include the Federal Housing Administration (FHA), Conventional Mortgages, USDA Mortgages, VA Mortgages, and Reverse Mortgages, among others.
Every borrower’s situation is different. So, there’s no universal loan product or a ‘one-size-fits-all’ mortgage. Also, not every borrower qualifies for every type of loan product. For instance, VA loans are only applicable to veterans. Plus, not every bank specializes in or has access to every type of loan product on the market.
Expert tip: Allow someone to help you shop for the right mortgage. As mortgage brokers, the Ranieri Team will take the time to analyze and discuss your situation to find the best loan product for you. Take advantage of our expertise!
Mistake #2: Not shopping for the best loan types and rates.
Most homebuyers look at different homes before settling on the ‘perfect’ one. But many don’t put the same effort into shopping for the perfect mortgage. As mentioned, not all mortgages are the same. Moreover, different lenders offer different rates with different fee structures. By comparison shopping, you may be able to save hundreds, if not thousands, over the life of your loan. Also, make sure that you choose the right loan type for your needs.
Expert tip: Worried that multiple credit checks from shopping around will hurt your chances for mortgage approval? Don’t worry! Finance companies expect customers to shop around. As long as you complete all your shopping within a 3-day window, it affects your credit the same as only shopping with one lender.
Mistake #3: Increasing the limit of your current line of credit or opening new lines of credit.
Did you know? Increased credit limits and new credit lines can potentially hurt your chances of getting a great mortgage. How? When you apply for a mortgage, the bank will check if you have at least 3 lines of credit that have been open for over 12 months. Plus, all these must be in good standing. New accounts don’t count as they don’t have the payment history proving that you’re a responsible borrower.
Expert tip: Before applying for a mortgage, make sure to pay down your existing debts. Also, talk to your mortgage broker before making any major purchases during the mortgage process. You may be close to the limit for debt-to-income guidelines, and any change could make a difference.
Mistake #4: Not knowing what to ask your mortgage broker.
You should ask your mortgage broker everything you want to know about the loan process. It’s their job to be an expert in their field and to help you find the right loan type for your situation. A mortgage broker who has been in business for a long time has encountered many different scenarios and can answer any question – or knows who to ask for the right answer.
Expert tip: While doing online research may answer some of your questions, it’s always best to ask an expert for their opinion on your personal situation. Don’t be afraid to ask questions. Your mortgage broker is your partner and guide throughout the mortgage loan process.
These are just some common mortgage mistakes that some people make. Keep these tips in mind to avoid these costly mistakes that may affect your mortgage application.
For expert assistance, don’t hesitate to contact us! We’re here to help you.