Mortgage Mistakes to Avoid for Homebuyers in NYC

So you have found the home you like and have placed an offer with the real estate agent, now you need to head to your lender and get a mortgage. However, sometimes, the process doesn’t go that easy. While dealing with a lender you know can be reassuring, you should also make sure you’ve made all the comparisons possible before getting a mortgage. Why? Your lender will make a lot of money from your mortgage loan through your interest, so you should make sure you get the right mortgage loan. Avoid these nine common mortgage mistakes.

Take the time to research your lender.

Your mortgage loan is one of the most important financial commitments of your life. You want to make sure you are choosing a reputable lender. Have customers been satisfied? Have any complaints about how are the mortgages handled? Having a good relationship with your lender is extremely important.

Never fall for the promise of low rates.

Getting a low rate on your mortgage is essential. However, you want to know whether the low rate is guaranteed and how long, especially if you are pre-approved. It will affect your house hunting process. If you are only guaranteed a low rate for one week, then you probably won’t find your ideal home in this short time frame. When a company promises to hold your interest rate for a specified period you want, make sure you get it in writing. If you don’t get the guarantee in writing, your lender can change the interest rate during closing. The best lenders give you time until closing and promise to hold your interest rate.

You think a program is right.

Often you will find several programs with select low-interest rate options. Beware that these may not necessarily be the best programs. Have your lender explain which programs better serve your specific needs and why they feel the programs are right.

Not shopping fixed and ARM mortgages and just accepting fixed rates.

Most people think a fixed mortgage rate is better than other options; however, keep in mind your unique situation. The most important thing to consider is how long you will live at the property. For most first-time home buyers, the average is less than four years. It can be a good idea for this period or less to get an ARM mortgage. However, if you plan to stay in the home longer, consider a fixed-rate mortgage.

You guessed on the mortgage market.

Floating isn’t a bad thing, but you need to pay careful attention to what is happening. It is complicated to time the market, so you will find a lot of investing advice, and with uncertain conditions, everyone wants to make the right decisions. The same holds for mortgage rates. Many try to guess when mortgage rates are the lowest before attempting to lock in the interest rate. Often, individuals will wait too long, which results in higher interest rates when people are finally ready to buy. It can be a good idea to lock in your rate as you near the closing period on your mortgage loan.

Before closing, you don’t negotiate all problems.

The most common mistake much make, as often an issue will occur before you close your mortgage deal, possibly a problem after your inspection, or you might have paid for a feature not included—the perfect time to take on any such issue. When you discuss a solution before closing on your mortgage, you will have time to analyze and determine all options.

Remember to include the cost of closing in your budget.

It can be a very costly mistake. Often closing costs can be between two to six percent of your purchase price, depending on your lender’s fees and other factors. It is required that lenders give you a Good Faith Estimate of your closing costs. This way, you can know what to expect when closing your mortgage deal, although your lender may not know all the closing costs associated with your specific situation. Ensure that your account for a little more than you’re Good Faith Estimate when setting aside money for closing costs.

Do not close your mortgage deal early in the month.

It may not seem like it, but this mistake can make a significant difference. After closing your sale, your lender charges prepaid interest for the recorded loan data to the end of the month. Therefore, if you want to get lower closing costs, you need to close your mortgage as late in the month as possible to decrease the prepaid interest you need to pay.

Ask for an explanation for every fee.

It can be another costly mortgage mistake. Have you noticed additional fees in your mortgage contract are not explained? These hidden fees can end up costing you hundreds of dollars. Remember, this is money you may need for other financial expenses. If charged fees, you shouldn’t be afraid to ask questions or get complete explanations before paying them.