Six Mortgage Mistakes to Avoid When Obtaining Financing
1. Overshopping Your Loan: While some customers are ONLY focused on rates, you should seek the guidance of a Certified Mortgage Advisor member that is willing to speak with you about your loan options. There are literally hundreds of loan products available and every borrower has a different financial situation and financial goal. I highly recommend having a consultation with a CMA originator so I can tailor a program to meet your individual needs instead of focusing exclusively on rates and points. You may likely find a better product than the one you were shopping for.
2. Trying to Hide Past Financial Difficulties: One of the important services a Certified Mortgage Advisor 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 originator 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 than others who haven’t yet faced these challenges. Overcoming past financial difficulties proves that you honor your commitments and don’t give up.
3. Allowing a Loan Officer to Put Misleading or Untruthful Information About Your Income, Expenses, or Cash Available For Down Payment on a Loan Application in Order to Get a Loan: Providing untruthful information on a loan application is fraud. Mortgage fraud is prosecuted by the federal authorities, and they WILL find out about fraudulent information. Do not allow yourself to become an accomplice of a loan officer’s fraudulent loan application. Even if a loan officer fills in information for you, if you do not believe the loan application is 100% truthful, you should refuse to sign it until the loan officer corrects the application. While many loan officers try to “help” borrowers by misstating the facts, the truth is that they are simply getting themselves and their borrowers into a lot of trouble.
4. 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 health 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.
5. Not Getting It In Writing: Since purchasing a home is often the largest financial transaction of a consumer’s life it pays to always get a copy of all of the documents you sign at the time of loan application. Don’t be afraid to ask me any questions that arise during the process. Remember, there is no such thing as a dumb question, especially with a financial transaction of this size. Some of the documents to pay particular attention to are the Fee’s Worksheet which will provide you with a breakdown of your proposed monthly payment, your closing costs, and the amount of funds you will need to come to the closing table with. It is mandatory that I provide you with this document within 72 hours of your application. Pay close attention to the Rate Lock Agreement as well. I will provide you with a written description of the rate you are being offered, the amortization term of the loan, and any points associated with this loan. These agreements should also include the expiration date of the agreed upon locked-in rate. This is the date that you have to close your loan to get that locked-in rate.
6. 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 APR 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 Certified Mortgage Advisor you can trust to review the options available to you and the best possible rates for your financial situation. Only a CMA loan originator can give you all of your options in an understandable way.