3 Major Mortgage Mistakes That Homebuyers Like You Should Avoid

Are you a meticulous buyer? How long does it take you to decide to buy something? For sure, you’ll spend more time and energy to shop for homes and mortgages, right? This way you won’t experience any buyer’s remorse and avoid costly mortgage mistakes.

Yes, it’s common to hear about homebuyers’ mortgage mistakes but the outcome is far from nice: being stuck with a mortgage with unfavorable terms. More importantly, these mistakes are not inevitable and surely are avoidable as we’ll show you how.

Get in touch with a lender today.

3 Homebuyers’ Major Mortgage Mistakes

Your biggest motivation to avoid the following mortgage mistakes: The opportunity of getting a better mortgage deal. Sounds like a deal?

Let’s count one to three mistakes you’d want to avoid at all cost when buying a home.

1. Not researching about mortgages.

Yes, knowledge is power and this rings louder in mortgages. Imagine undertaking a financial transaction, a debt spanning a decade and more only to be vaguely aware of what’s it about or how you came to be paying this much.

Start with the basics, such as:

  • What is a mortgage – It is money you borrowed to buy a home, secured by a promissory note, thus the name mortgage note. The home serves as collateral to the mortgage until such time as you have fully repaid the lender.
  • What is a mortgage rate – It is the charge, expressed as percentage, on the amount you borrowed.
  • How much is your mortgage rate – It’s a combination of numerous factors that represent your level of credit risk to the lender. Credit scores are a primary factor.
  • What are types of mortgage rate – Can also refer to mortgage types. Fixed-rate mortgages have rates that remain constant throughout the life of the loan versus adjustable-rate mortgages whose rates will adjust periodically after a fixed period.
  • How long do you repay a mortgage – Mortgages can take 15, 20 or 30 years to pay back in full. But some homeowners don’t wait that long to refinance – this means replacing the current loan with a new one with a lower rate/shorter term or get cash out of built equity.

A pro tip: Shop for mortgages first, homes can follow.

2. Not improving your credit score before applying for a loan.

Credit score/history is an important aspect of determining the creditworthiness of borrowers. The credit score is a result of all your credit transaction records compiled by the three major credit bureaus via a tri-merge credit report used by lenders.

Shop and compare rates.

What this all means is that your credit score closely determines your mortgage rate. The better this score, the lower the rate.

Thus, your credit score should be scrubbed clean and ready before you ask for a loan by:

  • Paying your bills on time, every time. Payment history will reflect your diligence and willingness to pay back your mortgage.
  • Minimize the use of your credit cards. Keep well below 30% of your credit card limits so your utilization rate remains low and your debts, too.
  • Avoid taking on large debts before the mortgage application. This increases your debt-to-income ratio and means that more of your income has to go toward debts.

3. Not shopping and comparing lenders, mortgage offers, and rates.

With mortgages, comparison shopping is king. There are a handful of things to shop and compare:

  • Rates – Lenders don’t offer uniform rates or their advertised rates unless you qualify for one.
  • Loan products – They are many loan products in the market with varying guidelines. There are ones backed by the government, i.e. FHA, VA and USDA loans. Then, there are conforming loans deliverable to Fannie Mae and Freddie Mae. Mortgages that are neither conforming nor government are called conventional loans.
  • Lenders – They will make the loans and evaluate the borrowers. Their standards vary and their requirements dependent on your circumstances. More importantly, they impose varying fees and charges on their loans.

Settle for a loan only when you have gone around to know that it is the best offer you have.

It’s in your best interest to know what you owe and avoid these costly mortgage mistakes.

Click Here to Get Matched With a Lender»

Get started today!

It only takes a few minutes to get started and best of all, it’s completely free. Get started finding the best mortgage options for you now.

Start Here

When inquiring about a loan on this site, this is not a loan application. This is not an offer to lend and we are not affiliated with your current mortgage servicer. Upon the completion of your inquiry, we will work hard to match you with a lender or lenders who may assist you with an official loan application and provide loan product eligibility requirements for your individual situation.

When applying for a loan, lenders will commonly require you to provide a valid social security number and submit to a credit check. Consumers who do not have the minimum acceptable credit required by the lender are unlikely to be approved. Minimum credit ratings may vary according to lender and loan product. In the event that you do not qualify for a credit rating based on the required minimum credit rating, a lender may or may not introduce you to a credit counseling service or credit improvement company who may or may not be able to assist you with improving your credit for a fee. Any loan product that a lender may offer you will carry fees or costs including closing costs, origination points, and/or refinancing fees. In many instances, fees or costs can amount to several thousand dollars and can be due upon the origination of the loan product.

This site is in no way affiliated with any news source or government organization and is not a government agency. Not affiliated with HUD, FHA, VA, FNMA or GNMA. This site may contain affiliate and partner links. This website and the company that owns it is not responsible for any typographical or photographic errors. If you do not agree to our terms and policies, then please leave this site immediately. If you submit your mobile number on this website you agree to receive marketing based text messages. Consent is not required for purchase. You will receive up to 4 messages per month. Standard text and data rates may apply. Reply STOP to stop & HELP for help.

Contents of this website are copyrighted property of the owner of this website. All trademarks, logos, and service marks (collectively the "Trademarks") displayed are registered and/or unregistered Trademarks of their respective owners.

In the event that you discovered this website through an advertisement, such advertisement may consist of stock photos, images, video or other publicly available resources. Any spokesperson used is an employee of the advertiser that owns and operates this website and is not a paid spokesperson or influencer.

© 2018 Mortgage.Info is not a government agency or a lender. Not affiliated with HUD, FHA, VA, FNMA or GNMA. We work hard to match you with local lenders for the mortgage you inquire about. This is not an offer to lend and we are not affiliated with your current mortgage servicer.