4 Common Mortgage Mistakes to Avoid

4 Common Mortgage Mistakes to Avoid

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If you’re in the process of buying a home; getting a mortgage loan can seem overwhelming. Whether it’s your first, or your tenth time buying a home, mortgage missteps can happen to all of us. Keep reading to discover four common mortgage mistakes to avoid.

1) Make sure your mortgage loan doesn’t have an early payoff penalty

Early payoff penalties are fees that lenders charge if you pay off the loan balance before the loan term is up. When shopping for a mortgage loan, carefully review the terms and conditions to ensure there is no pre-payoff penalty for paying off your mortgage sooner.

If the lender does include a penalty, request that it be removed before signing or consider looking for other loans with more favorable terms. It is also important to understand the specifics of the penalty, such as, the amount charged, and when it kicks in, so that you can make an informed decision.

2) Don’t necessarily go with the first lender you find

When shopping for a mortgage, it is essential to research and compare lenders to find the best financial solution for your situation. You should look at, not only the interest rate, but also the terms of the loan; the closing costs, and other fees associated with it.

It’s also important to ensure that the lender is reputable with a good track record. Taking the time to compare lenders can save you money in the long term while helping you find a loan that meets your individual needs and avoid costly mortgage mistakes that some many homeowners experience.

3) Avoid a small down payment

A smaller down payment will result in a higher loan balance; meaning, that you will pay more in interest over the life of the loan, which can hinder the process of building wealth. Additionally, a smaller down payment may require you to pay for private mortgage insurance, also known as PMI, which you will have to factor into your monthly budget.

Therefore, it’s best to save up a bigger sum to make a larger down payment. This will be essential to reducing your overall loan balance and monthly payments. A larger down payment will also help you avoid PMI and may even help you to qualify for a better interest rate.

4) Safeguard your credit

When buying a home, it is vital to safeguard your credit to secure the best possible terms on a mortgage loan. Taking proactive steps to protect your credit can help you get the most favorable terms when applying for a mortgage loan.

Make sure to review your credit report and verify that there are no errors or inaccuracies. It is crucial to keep up with any payments associated with your credit accounts and pay off any outstanding balances. You can check your credit at the Equifax web site:  https://www.equifax.com/.

You should also avoid taking out any new loans or lines of credit before you apply for a mortgage. This will help you secure the best terms for your mortgage loan. Don’t forget to monitor your credit score throughout the process, and ensure that it doesn’t fluctuate too much.

Although it can feel overwhelming, buying a home is a great way to begin building wealth. Doing your research, and using the Mortgage Me Free Interactive Amortization Schedule: https://www.mortgagemefree.com/our-program/ can help you avoid falling victim to these mortgage mistakes. Happy hunting!