For many homeowners their mortgage payment is their largest monthly expense. Surprisingly, many buyers do little in preparing for a mortgage when it comes to shopping around or negotiating. As a result, they are paying more than they need to be. Avoid these mortgage mistakes to help keep more money in your pockets.
- Don’t Fall For Advertised Rates
Most advertised rates are not obtainable unless you have perfect or a near-perfect credit score. That means most of the time buyers are not eligible for the low rate advertised, and instead end up paying part of what is known as a point to get the best rate available. Before securing a mortgage loan a potential lender will inspect every aspect of your credit in hopes of finding a reason to increase the rate you pay.
- Shopping Around
Many buyers fail to shop around when it comes to securing a mortgage loan. When looking for a loan you will provide your personal information to a loan officer or a mortgage broker which allows them to run your credit so that they can provide you with a ballpark rate. Call around to local banks, credit unions and savings and loan providers in the search of an affordable rate. Keep in mind that unless you provide them with your personal information that allows them to run a credit check the rate they quote you will not be accurate.
- Read Terms
The actual rate that is advertised isn’t what you will actually pay. The cost of your loan is the annual percentage rate (APR) which may also include fees that are tacked on by the lender. This is where reading the terms of the loan come into play. Some of the common fees you may see are loan origination fees or processing fees. These fees can vary greatly and are a good thing to ask about when shopping around for a loan. Loan appraisal fees are common and also vary greatly in price. These items are many times negotiable.
- Wrong Loan Type
Choosing the wrong loan type for you can be the biggest mistake. When choosing a loan you want to determine how long you plan to stay in the home, and what the current market conditions are. Fixed-rate loans tend to cost more than that of hybrid loans or adjustable rate loans. However, with a fixed-rate loan the amount you pay doesn’t change, but with an adjustable rate mortgage your base owed changes based on market conditions. Which means you could end up owing substantially more if rates go up. For those looking to live in their home for more than five years a fixed-rate mortgage is usually best.
If buying a home along the Jersey Shore is something you are considering, we’d be delighted to take the time to show you potential homes and to answer any questions you may have about owning a second home. Our job is to make your tomorrow better than today. Contact us today via email or give us a call at 609-264-6762.