If you are planning to obtain a mortgage, then you should make sure that you avoid a number of common mistakes that will leave you paying too much money or getting into financial difficulties. If you are aware of potential mortgage mistakes that can cost you money, you will be better equipped to get the best deal for your needs.
Here are the most common mortgage mistakes that can cost you money, and how to avoid them:
Not sorting out your finances
If you try to obtain a mortgage before you have sorted your finances out, you could find yourself getting a rough deal or even being rejected. Before looking at mortgages, get all of your finances in order and have all your paperwork ready to submit to mortgage lenders. Also, obtain a free copy of your credit report and make sure that all the information on it is correct. If there are mistakes on your credit report, it could harm your chances of getting a good mortgage.
Looking for a house without being pre-qualified
Many people make the mistake of looking at property without having any idea whether they can secure a mortgage to pay for it. Pre-qualification is an initial estimation of how much you can borrow based on your income, assets, credit and debt. It relies on the undocumented information you give to your mortgage broker or lender, along with a copy of your credit report. It is very helpful when shopping for a home. A full application would include the documentation needed to back up the information.
Borrowing too much
Perhaps the biggest mistake people make is to borrow too much money. This can come about through a combination of not being honest with yourself and pressure from lenders. If you are not honest with yourself about how much you can afford then you will end up in financial difficulty. You shouldn’t be tempted by lenders who offer you overly generous mortgages because it is you who will pay the price if you cannot keep up with the payments. Work out how much you can comfortably afford to pay each month and stick to this budget.
Not shopping around
If you want a good deal you have to shop around. If you find a good deal, you shouldn’t automatically think it is the best deal you can get. Many companies offer amazing deals that turn out to be a lot more expensive than initially advertised. Do your research and find out what someone with your credit rating should be paying on average for a mortgage. If you do this then you will end up with a much better price.
Paying for things you don’t need
There are many unnecessary closing costs and junk fees that some brokers and lenders add. Don’t be ripped off by hundreds or even thousands of dollars in extra fees. Check out our Mortgage Saver Program, and don’t pay these unnecessary fees.