Plan ahead. Expect lots of details to keep in mind in getting a mortgage for your home, whether you are looking for a new one or refinancing your current loan. Any oversight or forgotten information can quickly add up which can lead to bigger mortgage mistakes, and it could affect your bottom line and add up to more money out of pocket.
Check out the list below for some basic planning steps to follow which can help you avoid some common mortgage mistakes.
- Research your lending institution options.
There are lots of banks to choose, but before you decide on which bank to use, try to check out the local companies such as neighborhood credit unions. Credit unions, or community owned banks have the advantage of being “on the street” and being able to provide direct insight to the market of an area. While big banks have a larger pool of funds to work with, you won’t necessarily benefit directly from their “buying power.” Customer service and response times are often better with a local institution as well. Decision makers are usually available to help you if you have special financial circumstances that can make a mortgage difficult to handle.
- Watch Mortgage Interest Rates and be ready to act.
Better keep track of how rates are changing since mortgage rates fluctuate daily, so that when you are ready to get a loan, you can act quickly on an ideal interest rate. Don’t take too long to decide on which loan you might want to take because the speed at which rates can change could be risky. This could end up costing you more money in your payments just to cover a higher interest rate.
- Make Additional Payments.
It is a norm for us that when we get a mortgage, we plan to pay the payment set for each month. But if you can pay a little bit more each month, or a few more times in a year, you could get greater savings. The more of your principal you can pay; the sooner you can pay off your loan. You can arrange and make this happen with ease by establishing bi-weekly mortgage payments. This could help lessen the money paid interest over the life of your loan.
- Keep your credit in check.
Credit scores affect what you pay for borrowing money – your rank on credit score range matters. A credit score is a numerical expression based on a level analysis of a person’s credit files, to represent the creditworthiness of a person. This is based primarily on a credit report information typically sourced from credit bureaus. Credit scores are heavily weighed when it comes to mortgage loans. Avoid having even one late payment on a credit card or loan because it can dramatically affect your score, and take years to get off your record. Make sure to keep your payments on time and check your credit report regularly, at least once a month while you are in the process of getting a loan. Having knowledge on your credit score could help you know what kind of interest rate you can qualify for.
- Review your terms and rates often.
Interest rates change overtime and home values appreciate, so don’t assume that you have the best rate you can get. It is beneficial to regularly check interest rates and watch for new loan products most especially if you need a refinancing of your loan from time to time, as this could end up saving yourself thousands when you take advantage of a better rate or equity in your home.
Source: RealtyTimes.com, Wikipedia.com, nerdwallet.com
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