31 Common Mortgage Mistakes Smart People avoid

Caron

When you go for a mortgage, you're making a big financial decision. And, you need to be smart enough to choose the right offer and think as to how it can help you financially.

It's not unusual if you can't make the right comparison or if you misjudge terms and conditions or borrow more than you can afford. With a wide range of options available, it's a tough task to find out the one that's best for you.

However, if you're aware of the mistakes homeowners usually commit, you won't take the wrong step thereby avoiding financial stress. So, whether you're a first time buyer or one who's going for a refinance/second mortgage, take a look at the common mistakes, which can otherwise cost you a lot in terms of money and happiness:

tandonan · Joined: 17 Jul 2006 Posts: 7 0.65 Dollars($)

what is the maximum limit set for fha lons, conventional loans and va loans??how much interest rate are attached to these loans??

Caron · Posted: Tue Jul 18, 2006 9:56 pm Post subject: RE:

Hi,

You will find the answer to your first question from http://www.mortgagefit.com/know-how/loanlimit.html .

As far as the interest rates are concerned, these depend upon yields on Treasury notes and the Federal Funds Rate. The lenders charge interest rates on home loans based on these rates. The mortgage rates however, vary from one lender to another depending upon what they are willing to demand and also upon your credit score.

Thanks,

Caron.

Guest 0.10 Dollars($)

So, the very essential thing that a home buyer should put in mind to avoid mortgage mistakes is to clear out that the only person responsible for the payment of the mortgage is himself and no other will. Mortgage payment first and foremost should be taken personally with common sense. Many home buyers are making major mortgage mistakes as they examine and choose mortgages.

[Link removed as per forum rules. Thanks.]

Guest 0.10 Dollars($)

Coming to end of 2 year fixed mortgage. Already at high end of what can afford. Any suggestions on what kind of mortgage and what rates i should be looking at?

Guest 0.10 Dollars($)

Type of mortgage will depend on how long you plan to stay. If you do not have plans of shifting for quite some time to come then a mortgage for longer duration will be suitable. These mortgages have lower interest rates compared to short term loans.

If you provide some other details about your income, expenses and the value of the house then I can give you some more advice based on those details.

leojin_inno · Joined: 23 Feb 2007 Posts: 2 Location: NY 2.45 Dollars($)

"Coming to end of 2 year fixed mortgage. Already at high end of what can afford. Any suggestions on what kind of mortgage and what rates i should be looking at?"

I agree with guest Caswell. Depends on how long you'll stay... Factoring your payment in the past 2 years...if your ARM (fixed 2 yrs.) is interest only payments and you did not put any money towards your principal then your balance will remain the same...a lot of homeowners who took ARM program with I/O (Interest Only payment) relied heavily on the hope that property value would continue to go up just as it did 8-10 years ago. Unfortunately, due to increasing inventory, plus defaulting loans most states are getting hit with property value depreciation. An average for sale property sits on the listings for 8-16 months. Very few states aren't affected. Sellers and builders are pulling down their asking price or provide incentives and many sellers offers to pay half if not the full amount of closing cost, just so they can sell their house quickly. Nationwide income has not seen favorable increase, versus the expense for basic necessity. A lot of homeowners did not take care of their payments that their credit score is not going to provide them refuge.

If you have enough equity to cover the closing cost of refinancing or your property value is still high that you may have some more equity for cash out...then you should base your decision on how long do you intend to stay in the same house or state where you currently resides.

If you are comfortable and can afford a fix rate then you're better off with that...Most importantly your credit score is the biggest factor to consider if you are going to fall under Prime or Sub-prime market.

I hope I was able to get you sensible advice...

Joel aka refi

Guest 0.10 Dollars($)

Hi leojin,

I am planning to refinance my fixed rate loan into 5/1 year ARM , an interest-only for 10 years but i won't hold this loan for more than 8 years. Is it a fair decision or should I stick to the fixed rate loan? I am in florida. any advice is appreciated

Guest 0.10 Dollars($)

I think you should stick to a fixed rate loan because in an interest-only ARM, you will require to pay less during the interest-only period. But at the end of it, you will have to make a lump sum payment.

Guest 0.10 Dollars($)

Guest 0.10 Dollars($)

Ronald,

I guess there's some confusion here. A 5/1 year interest-only loan means a home loan on which you will be paying only the interest for the first 5 years. So, I think the loan should be interest-only for 5 years instead of 10 years.

Guest 0.10 Dollars($)

Sorry Alex, it's a 5/1 ARM and interest-only for 5 years itself.

Samantha · Posted: Wed Apr 18, 2007 12:58 am Post subject: RE: loan advice

Hi Ronald,

Currently the Florida 5/1 year interest-only rates are nearly around 6% and it is on an increasing trend. What happens for the next 5 years is yet unpredictable. Hence you can go for the 5/1 year loan and then after 5 years of interest-only payment, when your mortgage turns into a fully amortizing ARM, you can refinance it into a fixed rate loan.

Hope this helps..

God bless you.

Samantha

Guest 0.10 Dollars($)

5/1 ARM and interest-only for 5
what is your credit like?

ligroy · Joined: 03 May 2007 Posts: 10 5.50 Dollars($)

some things to consider posting that will help us further in solving your question.

what is your annual income?
what are your annual expenses?
what is the value of the home?
what is your credit score?

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