Whether you are looking to buy a new home or raise capital for your business, a mortgage plays a crucial role. Financing involves gathering all the essential knowledge and knowing the process of the same. There will be several questions from your end that need clear answers before you apply for a mortgage.
This also consists of knowing the common mistakes made when getting a mortgage and taking measures to avoid them. That’s because apart from the lack of substantial knowledge, it’s committing these mistakes that can cost you dearly during the application process. Let’s take a look at these common mistakes.
Not approaching the local mortgage company
It’s important to understand that real estate is always local. Several factors like tax laws, homeowners insurance, and federal tax laws differ from state to state. It’s no use asking a mortgage company located in New York City for assistance while planning to buy a home in San Diego. Not choosing the local mortgage company is one of the biggest mistakes to commit. You can approach a local real estate professional in your city to find top mortgage lenders there.
Not knowing there’s a difference between mortgage products, lender rates, and others
Very often, one of the most common mistakes made when getting a mortgage is assuming things. All mortgage products and related factors differ from each other and are in different areas. One should be aware about all the different products and their conditions before deciding the one that suits your requirement. Every mortgage product differs in terms and rates. Consider several questions and seek answers to them from a professional real estate agent. Ensure to have full clarity on the points mentioned below:
Knowing this information can save you hundreds of dollars and put you in a better position to close the mortgage.
Making no down payment or making a very small amount of down payment
Certain mortgage products allow you to buy a home with no money or by paying just a small amount of money. Though it sounds exciting, it is one of the potential and common mistakes made when getting a mortgage. It’s your disadvantage of buying a home without putting any money or by only making a small payment. Sellers are most likely to accept an offer with a large down payment compared to the one with no or a small amount of down payment.
Not considering the rate lock
During the process of closing the mortgage application, it’s crucial to consider locking in the mortgage rate. This is an agreement made between you and the lender to secure the current mortgage rate for a specific number of days. Skipping this step invites a higher rate of interest. You can also extend your rate lock if a closing date is not specified. The cost of extending the rate lock differs from lender to lender.