Worst Mortgage Mistakes And How To Avoid Them

Source: http://boiserealestateinfo.net
Publish Date: 8/15/2008 

Chances are if you’re a first-time home buyer, you’ve already felt the squeeze of the subprime fallout. Thanks to the bursting of the housing bubble – which spurred on the rising rate of foreclosures across America - it has become increasingly difficult for first-time buyers to secure a mortgage at a reasonable interest rate. Many banks and lenders have financially suffered in the fallout, and are now desperate to protect their assets. For first-time buyers, this means that you’ll be seen as a major risk to banks and mortgage lenders. But don’t give up hope yet! You can still be a winner when applying for mortgages; just avoid these common mortgage mistakes and you’ll come out on top.

Applying Without Knowing Your Credit Score

These days, it’s absolutely vital to know what your credit score is, so that you can be prepared to do battle when applying for that mortgage. Make sure to order your credit score up to a year before applying for a loan, so you have enough time to pay off any debts that are dragging down your credit score.

Shopping For A Mortgage Through Private Lenders

The one good thing about the subprime fallout? Federal and local governments are now more determined than ever to help out first-time buyers. These lending programs will often give you a better deal on your mortgage’s interest rate, and can offer more assistance if you ever have trouble making a payment. Go to www.hud.gov for more information on these public lenders.

Falling For Mortgage Scams

People with less than perfect credit are often vulnerable to mortgage scams, which require an up-front payment or a “deposit” on the loan. If you have a lender who is promising a great mortgage despite your poor credit score – and needs a “small” upfront payment – cut them loose. Shop only with well-known and reputable companies that have an extensive history of dealing with buyers with less than perfect credit.

Accepting The First Offer

So you’ve been shopping around for the perfect home loan, and you’ve finally found a lender who is willing to offer you reasonable terms on your mortgage. The next thing to do is to snap it up, right? Wrong! Shopping for a mortgage can be just like purchasing a car: you need to let lenders know that you have enticing offers from their competition in order to get the best deal. By using this method, you’ll be able to negotiate terms like your interest rate, saving you thousands of dollars in the long run.

Not Having An Emergency Fund

Even if you can easily afford your mortgage payments, there are going to be times in life where you’re going to encounter an emergency. Save up enough cash for three months worth of living expenses, and don’t touch this fund until absolutely necessary.

For first-time buyers, it’s important to be prepared while searching for the perfect mortgage. Don’t just sit there and let the banks come to you – make sure that you’re exercising all of your lending options, are knowledgeable about the kind of offers you can receive with your credit score, and are smart about which banks and lenders you deal with. There are still great mortgages out there – just make sure you take the time to find them.

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