3. Forgetting about the Fees and Closing Costs
A mortgage is not just about the amount that you are going to finance. Other fees and costs come before setting up said mortgage.
Generally, you have to put some kind of a down payment on the home if you are buying. This is not usually the case if you are refinancing, but whether it is a refinance or you’re buying, most lenders charge closing costs and fees.
Since these are generally out-of-pocket expenses, it’s important to be aware that these fees and costs exist and find out what fees and how much the lender is charging.
4. Maxing Out the Amount You Mortgage
Have you heard the expression house poor? If you buy more of a house than you can afford, then you become house poor because all of your money is going toward your mortgage.
Keep in mind that the amount a mortgage lender approves you for and the amount you can actually afford are two different numbers. For qualifying purposes, a lender does not factor in your insurance payments and your utility bills. In other words, they are not basing your qualification on the total amount in bills you have to pay out each month.
You, on the other hand, should be thinking about all of your expenses and whether or not adding that mortgage payment, taxes, and insurance on the property is keeping you in the black or sending you into the red.
5. Not Reviewing Your Own Credit
Especially after the mortgage crisis in the not-so-distant past, mortgage lenders are taking a long hard look at credit history and credit scores. Before you even think about applying for a mortgage, review your own credit.
Look for any blemishes or inaccuracies on your credit. If anything pops up, work directly with the creditors to correct, fix or remove the blemishes or inaccuracies.
Remember, credit can make or break your ability to qualify for the mortgage and can even affect the interest rate you pay, so you want your credit to be in tip-top condition.
6. Thinking All Lenders are the Same
Just like all mortgages are not the same, all lenders are not the same either. Some lenders charge fees that other lenders do not charge, so shop around when you are trying to obtain a mortgage. Don’t stop after talking to one lender.