Top 7 Mistakes to Avoid When Shopping for a Mortgage
By Anthony J. Rigney
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I have been a mortgage professional for the last 9 years and in that time I have seen consumers make many mistakes when shopping for a mortgage. Below I set out a few pitfalls you should watch for. Avoiding these seven mistakes should make your next mortgage experience an enjoyable one.
- Not shopping enough. Hard as it is to believe many people only obtain one quote when looking for a mortgage. Sometimes they go to their Bank or Credit Union and sometimes they use the lender recommended by the realtor or builder. This is a big mistake. I recommend you look for 3-4 quotes. Be fair and let everyone know you are shopping. Don’t necessarily go for the lowest bid. Be sure to take reputation into account. Otherwise it could come back to bite you later.
- Shopping too much. If you shop around too much you greatly increase your likelihood of coming across the bad actors in our industry. Look too hard for the “lowest” rate and you are sure to find someone willing to say anything to get your business. They know you are unlikely to walk away at closing – so it works for them – at least in the short run.
- Choosing the wrong loan. If you are on a fixed income don’t pick a high risk loan such as the “Option ARM”. This type loan gives you a low teaser rate – often around 1% - but can pile “negative equity” on your mortgage balance. Know your risk level and stick with it. A reputable mortgage professional won’t steer you in the wrong direction - which brings up number four.
- Not doing your homework. This goes hand in hand with the first two. Research the companies you are considering doing business with. The Better Business Bureau and your States financial regulatory body are good places to start. If you are dealing with a Mortgage Broker – make sure they are a member of the NAMB (National Association of Mortgage Brokers). Ask for references. Look for someone who returns your calls, is pleasant, informative and knowledgeable
- Not telling the whole story. Don’t hold relevant information back from your loan officer. For example, if you are self-employed and have difficulty proving your income – tell him/her in advance. It will ensure you get an accurate quote and make the loan process run smoothly.
- You like to look them in the eye! Don’t select a Lender just because they have an office near you or because you have your checking account there. That local office may add to overhead and mean a higher rate. Once again get 3-4 quotes and check reputations.
- Not Reading the paperwork. Read the paperwork! Your Lender will send you loan disclosures within 3 days of your application. Pay special attention to the “Good Faith Estimate” (GFE) which will show your closing costs and the “Truth in Lending” (TIL) Form which shows your APR. At closing pay attention to the “HUD1” form which will show your final closing costs. Also important the “Note” (which shows your interest rate) and look for any mention of a “prepayment penalty”. This could cost you thousands if you plan on moving or refinancing in the near future. If you have any questions ask your loan officer right away.
This article was written and submitted by Anthony J. Rigney.
Mr. Rigney is President and owner of First Integrity Home Loans LLC, a Florida licensed mortgage broker.
For more information please vist us online at [http://www.myfloridarates.com]
Article Submitted On: September 28, 2007