Mistakes made when getting a home loan mortgage can be very costly, adding up to several thousand dollars if you’re not careful. So clearly then, it’s important to know what the most common costly mistakes are when applying for a home mortgage loan, and then do your best to avoid them. Here are the top five deadliest mistakes that mortgage buyers often make:
1. Very often consumers really don’t know exactly how much of their own money they will need to put in to get the mortgage they want. There are usually two parts of a home loan where you will need to put some of your own money into the deal. These are the down payment and closing costs. Of course, the more you can put down, the better terms and rates you’ll often get, but putting too much of your own money into the deal can leave you strapped for cash and unable to care for any emergencies that may arise. On closing costs, it’s a good practice to get a written estimate from your lender in advance so that you have a good idea of what your costs will be before you get to that part of the process. You don’t want to get to the very end of the deal and have a major unpleasant surprise to have to deal with.
2. Very often many of the problems that consumers have with getting a home mortgage loan is due to not having much understanding of the process itself. So be sure that the mortgage lender you work with is willing and able to take as much time as is necessary to help you understand each part of the process and explain any terms that you don’t understand.
3. A very common mistake that home buyers make is making a major purchase of some consumer item such as a car just before trying to qualify for their home mortgage. Mortgage lenders use a formula called the debt to income ratio to try to assess the home buyer’s ability to pay for a particular mortgage in advance, and any consumer debt that you add simply reduces the amount of house that you can buy under their guidelines. So delay any major consumer purchases, especially those made on installment payments until after the mortgage papers are signed if possible.
4. Another mortgage mistake that relates to your credit history is shopping for a mortgage loan in too many places at once. Although it’s a great idea to shop around for different rates and terms, you must realize that every time a company pulls your credit history it will adversely affect your credit score and make it harder for you to get the best terms and rates possible. By using a quality mortgage broker, this problem can be significantly reduced.
5. Another credit mistake that can have a direct impact on your mortgage loan is the overuse of credit cards. They are very easy to use but if the credit card balances are left at high levels it can definitely affect your ability to get the best terms and rates on your mortgage loan. So try to keep your credit card debt as low as possible in order to get the best mortgage.
Getting a mortgage loan can be stressful and intimidating, but by avoiding the mistakes listed above you should be able to get a home loan mortgage with low interest rates and favorable terms.
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Help answer the question about home loan mortgage
Can a conventional home mortgage loan be refinanced using FHA?I know that if a person already has an FHA loan, they may refinance using the FHA Streamline process. If a person currently has a conventional mortgage loan, can they refinance using FHA? If posible, can you please provide me the resource where I can read this information. Only if that's not to much trouble. I looked on the HUD website but locating that particular information was far to cumbersome. Thank you
No matter what lender you choose there is always a chance that that bank will sell your loan to another Bank. The Lending world is very competitive and the answer to that question is Which one will save you the most money? And give you the best service. As a broker our job is to save you money and offer the best service no matter who the actuall lender is.
See if you qualify for this program:
http://www.thegenesisprogram.org/builders_faq.cfm
What it does is pays for the down payment. Right now since it is a buyers market, it is likely that the owners will pay for closing cost, if that is a new home incentive.
1) Get your fico scores, freecreditreport.com
2) Know your credit profile, what you owe, things you can pay off in the next 6 months may not be counted at all.
3) Face the music, talk to a lender, you need to know what you qualify for now, and at what % rate in order to make the best decision for what you can afford.
4) How much can you afford? An example is that old rule of 3x your income, make a $30,000 then you can likely afford a $90,000 house, keeping the housing monthly expenses between 28 and 41% of your monthly gross income. (Still, your lender is the best source)
5) Contact HUD for a list of programs you may qualify for especially if you are a first time home buyer.
Difficulties:
If your debt to credit ratio is too high. Pay off debts, take 6 months to 1 year to pay down your debt before exposing yourself to house cost, house maintenance cost. The rule of thumb is you do not want more than 25% worth of debit based on the credit you have been approved for. An example is 1000 cc / nor more than 250 utilized credit or debt.
If your past debt is unresolved, everything you pay for when you get a house is based on your credit. Cable/SAT, phone, water, trash, sewer, propane, these companies can charge you fees depending on your credit score.
Do not buy anything (big – a car) and Do not close any credit card accounts. Credit helps you, if you close an account, now the other credit cards have to take up the slack.
An example,
$4000 CC A
$3000 CC B
The debt on $3000 credit card B is $2000. The debt on the $4000 or ccA is $3000. If you close credit card credit card B, you are now in the red for extra $1000 over what CC A can cover.
Good luck to you and your family!
I work at a mortgage company, and most banks require title insurance for every mortgage that they underwrtie.
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What is the Key disfavors by Having Your Mortgage
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Banks would love you to pay more points up front, because paying points is paying interest in advance to make you think you are getting a lower interest rate (an illusion).
The total cost of the loan over the full term is probably the same either way, points plus lower interest rate vs. more down payment and higher interest rate for a smaller loan. So over the long run points do not help you unless it gives you a tax advantage.
Hey Bank of America! You didn’t do squat for me and my husband. You promised the world but delivered nothing. So why don’t you get off this website and go do somethingproductive??? Like….get an education!
You're partially wrong.
If you pay $15,000 a year in interest and property taxes AND you are in the 15% tax bracket, you get to reduce that $15k from your income. This means you will pay $2,250 less in federal income taxes. So in other words, you are paying $15k to save $2k. It's not good business sense, but it's better than not saving anything…but that's not the entire story…it gets worse.
You only get to deduct the $15k IF AND ONLY IF you itemize your deductions (instead of taking the standard deduction). If you are married, your standard deduction is $11,400 ($5,700 if you are single).
Since you are paying $15k in interest/taxes, you get to deduct an extra $3,600 than you otherwise would have been entitled to anyway. Therefore, your net tax benefit really isn't $2,250. It's only $540 (15% of $3,600).
But wait…it gets worse…
You are only paying $15k in interest/property taxes the FIRST YEAR of the mortgage. Keep in mind that part of your mortgage payment goes to principle. While your payment each year will be the same, the amount going towards principle and the amount going towards interest will change. Eventually, that $15k payment each year will only be a few thousand worth of interest…at which point there is ZERO tax benefit.
Don't see why not. Each state has different rules and regulations regarding this particular matter.
Ampedee, I’m a mortgage broker and banker. I used to work for one of the largest banks in the country and to be honest our fees and costs were so much higher than brokers. Large banks spend money on advertising and pay salaries.
That is a great video, you break it down very well.
Other Factors: With some lenders they require that your appraisal not be a significant amount less that your loan, because if something were to happen and your home went into foreclosure, they want to be sure they can sell the house and get what you owe them back. Credit Scores, the amount of debt that you have, ie credit cards, student loans, etc., they will require that you pay some of that off so that they will be your primary lender. If you are purchasing, lenders usuallly require a termite inspection, home owners insurance and if you have prior mortgages, they will want those paid off as well. Usually not a whole lot is paid upfront except maybe your appraisal. Hope this helps and if you live is SC or GA request that McLeod and Dowling be your closing agent!! As a thank you to me for answering your question!!!
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The best thing you can do is arm yourself with knowledge, even better if it’s free. a little time and a few clicks now could save you years and thousands of dollars later.
the choices you make today define your tommorow.
hoyl hell this guy is a good sales man, but being in the mortgage industry my sell i see right through alot of his bulshit. GETTING YOUR LOAN THROUGH A BROKER MEANS UR GOING TO PAY MORE IN FEES, BECAUSE THAT LOANS GOING TO JUST END UP AT ONE OF THE BIGGER BANKS IN THE LONG RUN ANWAYS…..
It is absolutely possible to get a mortgage. Our lease on the house we are renting is about to expire and out of curiosity I called to find out if it was even possible to get a loan. My credit score is around 550 and we were able to get a mortgage with only 3% down and a 30-year-fixed with an interest rate of 6.625. Maybe some think that is high but I'm definitely willing to lock that in for nowf until I can get my credit under control. So yes, I think you should definitely start calling or contacting lenders and see what is available in your area. If you have any questions, you can email me. Good Luck!
very professional response b of a.
If she has a VA loan then have her call the company that holds her mortgage, see if she can get a lower rate with a new loan. They may offer some type of VA streamline refinance so it will be fast and easy and a lower rate for her.