Personal Finance

7 Worst Mistakes to Make with Your Mortgage

Shop and compare at least three lenders before deciding which one is the right one for you. Look at interest rates, fees, costs, and APRs to compare each lender very carefully before making a final decision.

Word to the wise, though, in order to make a true comparison, you have to compare the same type of loan at one lender with the same type of loan at another lender. (You have to compare a 5-year ARM to a 5-year ARM. You can’t compare a 5-year ARM at one lender to a 15-year fixed rate mortgage at another lender.)

7. Failing to Negotiate

Take a long hard look at the fees the lender is charging you and don’t be afraid to negotiate away what are known in the industry as “junk fees.” Junk fees can be anything from an application fee (that is not credited back to you at closing), sign-up fee, or document prep fee to messenger and faxing fees.

If you see a fee that seems out of the ordinary (especially ones that you aren’t seeing from lender to lender when comparison shopping) question it. If it seems like a junk fee, let the lender know that you aren’t going to pay it or that they need to reduce it (negotiate the fee).

What you see doesn’t necessarily have to be what you get (or in this case, what you pay).

Obtaining a mortgage is a big step. There are a lot of working parts to finding, qualifying for, and establishing a mortgage. Avoid making these seven mistakes and you’re at least starting out on the right path.

Mortgage holders, what mistakes have you learned from with your mortgage that you’d like to share with our other readers? Post them in the comments below!

About the author

Kristie McCauley

Kristie McCauley

Kristie Lorette McCauley is an award-winning expert on personal finance, mortgages, and credit. She has published articles on major finance and credit blogs, such as Yahoo! Finance, Quizzle, Money Crashers, and BankRate. She is also the author of books, such as How to Use the Equity in Your Home or Business Today to Invest for Tomorrow and How to Open & Operate a Financially Successful Personal Financial Planning Business.


  • Great points, another thing I now look at is the ability to pay any additional amount towards the principal (in the easiest possible manner). Some lenders have a program to break your mortgage payment in half, so you pay half of your mortgage biweekly – this can shave years off of your loan. The one disadvantage is that that normally means it MUST be an automated payment. My lender sold our mortgage to another provider who is testing the biweekly payments out but doesn’t have the program in place yet. Unfortunately, they only allow you to make extra payments online, but nothing is applied to the mortgage until you call in and tell them to apply it to the principal – any unapplied funds.

    If you can swing making at least ONE extra mortgage payment per year it helps to shave off years as well. Don’t wait till the end of the year, just make an extra $100/per month payment if you can swing it (or whatever monthly adds up to one whole payment by the end of the year)!

  • Truly Kristie is a knowledgeable financial entity; her observation that insurance, utilities and the like do not appear on the 1003 is almost brilliant. Although, lower credit purchasers who use alternative credit might have to furnish this info to the underwriter, Kristie is 99.9% correct – these budget items should be considered.

    The only weakness in her article is a failure to cleary clarify the impact of ignoring APR in favor of lower interest rates – on the overall early loan termination; i.e. What cost adjustment/corrections occur on the financial end to a purchaser who finances 30 years and opts out at 5 years.

    Kristie has inspired me to write a few articles about mortgages that I will provide for your program at a later date;this is based on last mortgage loan processor & officer training and past service as a loan underwriter & residential & commercial real estate broker.

    I joined because I deem this program a consumer service

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