If you are shopping for a mortgage make sure you avoid making these common and expensive mistakes. It is easy to overpay for a mortgage if you are not careful when shopping. Here are tips to avoid common mortgage mistakes that could save you thousands of dollars. Deciding which mortgage broker or lender is right for is an important financial decision that should not be taken lightly. Make sure you have satisfactory answers to all of the following questions before signing any mortgage contract. What is the Bottom Line on the Actual Interest Rate? If your mortgage lender or broker dances around this question look elsewhere. Some mortgage lenders try and dazzle homeowners with extremely low interest rates only to find out this was an introductory rate and the actual interest rate is much higher. If you are using a piggyback mortgage drill down the interest rate for both loans as they will be different. Interest rates are somewhat negotiable; do not be afraid to haggle with your lender over the interest rate you qualify for. Does the Mortgage Have a Prepayment Penalty? Prepayment penalties are a fee you pay to the lender if you refinance or sell your home during a certain period of time. This penalty can be quite hefty; some lenders charge six months worth of interest on 85% of the original principle balance. If the mortgage lender includes this penalty find out for how long and ask why it is there. If you have good credit there is no reason for a mortgage lender to include a prepayment penalty. If you have poor credit you may need to bargain for a shorter time period like six months. Do not accept a mortgage with a prepayment penalty for one or two years. What are the Exact Closing Costs? Many homeowners overlook closing costs when shopping for a mortgage. Closing costs vary greatly from one mortgage lender to the next and are subject to negotiation. The closing costs you pay will add thousands of dollars to your total finance charges; when you shop for a mortgage you need to carefully compare closing costs using the Good Faith Estimate from each mortgage lender. Paying attention to this step has the potential to save you a lot of money. To learn more about finding the best mortgage for your situation while avoiding costly mortgage mistakes, register for a free mortgage guidebook using the links below. |
