The 7 Deadly Mortgage Sins

My first piece of advice is to contact a local mortgage broker in your area. Check them out with the Better Business Bureau and with the local Chamber of Commerce. Another good indicator is the length of time they have been in business. You are committing to a long term situation. If there is a problem ten years down the road you would like to think they are still going to be around to assist you.

Enlisting the services of a mortgage expert that you can converse with face to face will make a significant difference in the cost and effectiveness of the mortgage you obtain. For example, they can make the process faster thereby avoiding costly delays. Be sure that there is no cost or obligation to enquire.

Whether you are about to buy your first home, or are planning to make a move to your next home, it is critical that you inform yourself about the factors involved in obtaining a mortgage. Small differences in the way your mortgage is structured can either cost or save you thousands of dollars.

Industry research has revealed that there are 7 common mistakes that most homebuyers make in mortgage shopping that can have a significant impact on the outcome of this critical negotiation. If handled correctly, these issues could result in a mortgage that will cost you less over a shorter period of time.

Before you commit your hard earned dollars to monthly mortgage payments, consider these seven issues. Effective consideration of these important areas can make your payments work much harder for you.

1. You can, and should, get preapproved for a mortgage before you go looking for a home. Preapproval is easy, and can give you complete peace-of-mind when shopping for your home. Have our mortgage broker provide you with a written preapproval. Again be sure that there is no cost or obligation or your part. Before requesting preapproval you need to review your credit report and your credit score. For information visit Your Credit Report

More than just a verbal approval from your lending institution, a written preapproval is as good as money in the bank. It consists of a certificate which guarantees you a mortgage to the specified level when you find the home you're looking for.

2. Know what monthly dollar amount you feel comfortable committing to. When you discuss mortgage preapproval with your lending institution, find out what level you qualify for, but also pre-assess for yourself what monthly dollar amount you feel comfortable committing to. Your situation may give you a preapproval amount that is higher (or lower) than the amount of money you would want to pay out each month. By working back and forth with your lending institution to determine what this monthly amount is, and what value of home this translates into at today's rates, you won't waste time looking at homes that are not in your price range.

3. You should be thinking about your long term goals, and expected situation, to determine the type of mortgage that will best suit your needs. There are a number of questions you should be asking yourself before you commit to a certain type of mortgage. How long do you think you will own this home? What direction are interest rates going in, and how quickly? Is your income expected to change (up or down) in the near term, impacting how much money you can afford to pay to your mortgage? The answers to these and other questions will help you determine the most appropriate mortgage you should be seeking.

4. Make sure you understand what prepayment privileges and payment frequency options are available to you. More frequent payments (for example weekly or biweekly) can literally shave years off your mortgage. Simply by structuring your payments so that they come out more frequently, will significantly lessen the amount of interest that you will be charged over the term.

For the same reason, authorized prepayment of a certain percentage of your mortgage, or an increase in the amount you pay monthly, will have a major impact on the number of years you will have to pay and could shorten your payment term considerably. These two payment options can cut years off your mortgage, and save you thousands of dollars in interest. However, not every mortgage has these prepayment privileges built in, so make sure you ask the proper questions.

5. Ask if your mortgage is both portable and/or assumable. A portable mortgage, where available, is one that you can carry with you when you buy your next home and avoid paying any discharge penalties. This means that you will not have to go through the entire mortgage process again unless you are making a move up to a much more expensive home.

An assumable mortgage is one that the buyer for your home can take over when you move to your next home. This can be a very powerful tool at the negotiating table making it much easier and more desirable for a buyer to buy your home, and again saves you any discharge penalties.

6. Negotiate the fees that the lending instution will be charging you at the closing. Most For Sale by Owner home buyers know to shop around for the best interest rate. You can and should shop around for the best fees. Many mortgage companies will provide you with a "best estimate" that they can change wihout notice at closing. This is the number one complaint that I am seeing with mortgages.

This is their business and they do it every day. Don't fall for the line that they need to wait to determine the closing costs. Make them give you a written "not to exceed" guarantee of the fees you will be expected to pay.

7. Retain your own attorney. Many states, including South Carolina, require that an attorney perform the closing. You should never use an attorney recommended by the lending institution. If there is a problem his/her loyalty is not going to lie with you. Never ever sign anything without having it reviewed by your attorney. If you need to locate a real estate attorney in the US or Canada call us at 800-550-3308 or send us an email to info@homes-in-sc.com.