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31 Common mortgage mistakes smart people avoid

Author: Jessica Bennet
Community Mentor
Ask Jessica
Posted on: 17th Oct, 2005 08:56pm
Obtaining a mortgage loan is not a very easy task. Rather it is a very intricate and time-taking process. Importantly it is a very significant move in your life.


It is often seen that out of the excitement of owning your dream home, you commit mistakes. You also make mistakes because of your ignorance on mortgage as well as because of the complexities involved in the mortgage process. Sometimes these wrong steps taken by you prove out to be very costly. You may have to incur huge losses and even may have to face the negative consequences of foreclosures.


You can make mistakes while taking out a fresh mortgage loan, while opting for a second mortgage loan and while refinancing your original mortgage loan. Take a look at 31 common mortgage mistakes in total.


12 Home-buying mistakes to avoid


Owning a home is a symbol of personal achievement and is very self-satisfying too. But it is not a cakewalk. In fact, your dream of owning a home can turn out to be your financial nightmare because of your wrong steps while making the purchase. Have a look at 12 common home-buying mistakes so as to shield yourself from these slip-ups.


10 Big second mortgage mistakes to stay away from


Once you have taken out a mortgage loan and have acquired some equity in your home, you may become complacent at the time of taking out a second mortgage loan. Have a look at these 10 second mortgage slippages so as to better equip yourself to cash in on your home equity.


9 Refinance Mistakes and how to avoid them


The allurement to enjoy better rate of interest may instigate you to plunge into refinancing. But your imprudence and hasty decision may put you into serious troubles too. Know about 9 common refinance mistakes so as to safeguard yourself while replacing your original loan with a new one with better terms.


If you however have proper knowledge about these common mortgage mistakes that many home buyers often make, it becomes comparatively easy for you to make the right mortgage move.
Posted on: 17th Oct, 2005 08:56 pm
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 know how it can help you financially.

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

however, if you're aware of the mistakes many homeowners usually make, you won't take the wrong step. so, whether you're a first time buyer or one who's looking for a refinance or second mortgage, take a look at the common mistakes, which could otherwise cost you a lot of money:
99, that was a loan officer or an underwriter? if a loan officer, i wouldn't be too concerned; if an underwriter, i'd be very, very worried.
Posted on: 01st Apr, 2009 10:31 am
Not knowing how much they can afford before they make an offer.

The easiest way to avoid this mistake is to get pre-approved for a mortgage, so you know in advance exactly how much you can afford.

Loan modification

[External link deleted as per forum rules]
Posted on: 03rd Apr, 2009 12:03 am
"99, that was a loan officer or an underwriter? if a loan officer, i wouldn't be too concerned; if an underwriter, i'd be very, very worried.
"

I am really not able to comprehend what is the real story about it if it was handled by loan officer and what if it was handled by the underwriter?

gmakerley

can you shed some light on this further as it is still not very clear to me what is the difference between the approach.
:arrow:
Posted on: 07th Apr, 2009 09:27 am
underwriters approve loans

loan officers generate the potential loans that the underwriters must review.

manoj, it is usually helpful for someone to have a minimal working knowledge of a topic before beginning to express opinions about what does or does not work, or to offer advice on how to handle situations. please get some additional education concerning mortgage and related business.
Posted on: 07th Apr, 2009 01:27 pm
I totally agree with your point.. Becoming familiar with many mortgage program, comparing and choosing what suits your needs
is truly a big decision to make..Therefor homeowners should be smart enough to know these kind of stuff and by becoming aware with the
mistakes of others is a lesson that we must also learn and understand.. Great Links.. Thanks for sharing..
Posted on: 14th Apr, 2009 09:58 pm
Coming from Switzerland, we had to get used to a whole new set of rules. Thank you for this listing.
Posted on: 07th Aug, 2009 02:39 pm
thank you for the testimony, us. it's always nice to hear of the good this community does.
Posted on: 10th Aug, 2009 07:22 am
So if you have a mortgage that is a 5 year arm but you are planing to stay in your home for 8 years minimum, you would have to deal with an interest rate that is adjusting on you from the 6th through 8th year. You may be better off looking into an interest only 10/1 ARM if a new 30 year fixed rate loan wont meet your payment goals.
Posted on: 17th Aug, 2009 02:54 pm
Personally I've usually found it most beneficial to have shorter fixed rate periods of 2-3 years, as not only interest rates can change over time, peoples personal circumstances can as well.

also the penalties for breaking a 2 or 3 year fixed term and significantly smaller than say a 5 year rate and the interest differences are greater.

One thing I've seen many people get caught by is trying to pay off their loan TOO aggressively, i.e. setting their repayments at the max they can possibly afford. This is fine as long as no one loses a job, gets pregnant, falls ill or has any other sort of unexpected drop in income or rise in expenses. Going to your bank and trying to reduce your payments can result in all kinds of problems and fees - better to work on having a "fat reserve" in your budget, so you can save some money as well as pay the mortgage.

that way if you do hit a speed bump, you can use that reserve to prop you up, and hey if you never need to use it, just hold on to it until the fixed term expires and drop it straight onto the principle - it'll be almost as good as having had those higher payments all along but with much less stress and risk.
Posted on: 13th Oct, 2009 06:03 pm
wretched you like 2-year and 3-year adjustable rates? i'm surprised to see anyone say that...not necessarily that you are incorrect, but most folk are terrified of increases, even though history doesn't necessarily prove them right.

in the last 15 years or so, i have to agree with you in large part, because variable rate loans have performed pretty well in that period (overall). i had a one-year arm from 1996 until 2005, and it never hurt me at all. my current mortgage (home bought in 2004) just adjusted for the first time (5-year arm), and i went from 4.5% to 4%. i've been treated well by adjustables, and i don't think they're the terrible thing they've been painted to be.

i admit that the sub-prime variables were nasty, but they were based on risk: high risk customers are always going to be finding more expensive products. that's a given in the industry.
Posted on: 17th Oct, 2009 09:51 am
If your exploring your options from a 30yr fixed and a 5 yr fixed you will need to ask yourself one question, how long do you plan on staying at your home? Talk to your Mortgage Loan Professional today.

Kal Patel
Voyage Home Loans
Posted on: 20th Oct, 2009 02:23 pm
shop shop shop is all i can say!
Posted on: 13th Nov, 2009 06:14 pm
hi

do we need any credit history for getting loan first time, or we can apply without any past transaction with financial institution,
Posted on: 23rd Nov, 2009 11:39 am
Hi John,

You will need to have a credit history in order to get a loan. Lenders will check your creditworthiness through your credit history. They will offer loan only if your credit history is good. If you have no credit history, get yourself credit cards and build some sort of a credit history by showing you pay off your monthly bills on time. But do not over spend, do not let the credit limit on your credit cards cross 50% mark. Pay off your credit card bills on time. Once you have established a short credit history of about 6 months, you can start applying for a loan.
Posted on: 27th Nov, 2009 05:03 am
a 6 month time frame is a bit scant, savior. most people won't have built sufficient credit to come up with scores worthy of a mortgage approval in that short a period.

better to wait a year and perhaps even more before entertaining the idea of making a home purchase when there's new credit to deal with.
Posted on: 29th Nov, 2009 08:06 pm
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