10+Major+Mortgage+Mistakes+to+Avoid by fanzhongqing


									                  10 Major Mortgage Mistakes to Avoid
Getting a mortgage is no simple task: It's a complex and time-consuming process,
and perhaps one of the most significant events of our lives, at least in financial
terms. Here are ten potential pitfalls to avoid.

1. Not Checking Your Credit long before you begin searching for a mortgage, you
should know where you stand in the credit score department. After all, a bad credit
score can bump up your mortgage interest rate several percentage points or leave
you with no approval at all. Be sure you check your credit early on (several months
in advance) in case any changes need to be made to get it back up to snuff.

2. Applying for New Credit Alongside the Mortgage: In this same vein, be sure
to avoid applying for any other type of credit before and during the mortgage
application process. Whenever you apply for new credit, you're seen as a greater
credit risk, at least initially. If you happen to apply for a credit card or auto loan
around the same time you apply for a mortgage, your credit score might get dinged
enough to kill your eligibility or bump up your interest rate.

3. Failing to Look at the Total Housing Payment: A mortgage payment consists
of principal, interest, taxes, and insurance (PITI). A common mistake made by
prospective home buyers is not factoring in their property taxes and insurance
premium into their overall mortgage budget. The debt-to-income ratio (DTI ratio),
used to determine if a borrower will qualify for a certain mortgage payment, is
calculated by dividing the proposed cost of PITI by gross monthly income. A $1,200
homeowner’s insurance policy would add $100 per month to an escrowed mortgage

4. Not Seasoning Your Assets: The bank or lender will want to see that you can
actually pay your mortgage each month. But without seasoned assets, those that
have been in your own account for at least a couple months, you could be out of luck
entirely. Some borrowers seem to think they can transfer funds from a relative's
account days before applying, but this simply won't fly once the underwriter
uncovers the paper trail.

5. Job Hopping: Another key to mortgage approval is steady employment and
income. An underwriter will want to know that the income you bring in every month
is consistent and expected to continue into the foreseeable future. So don't jump
from job to job too much before applying for a mortgage. If it's in the same field, it
shouldn't be a deal killer, but a career change will lead to problems. If you're
thinking about jumping ship, wait until you've closed your mortgage first.
6. Not Getting Pre-Approved: Good preparation is the key to a good mortgage.
Before shopping for a home, make sure you can actually qualify for financing by
getting a pre-approval. A mortgage pre-approval is more robust than a simple pre-
qualification because the bank pulls your credit and looks at your income, assets,
and employment. Your DTI ratio will also come into play to ensure you know exactly
how much you can afford. With this pre-approval, you will also get a written
commitment from the lender that will show home sellers you're serious about the

7. Not Meeting the Mortgage Banker: often time’s home buyers go through the
process with out ever meeting their Mortgage Banker. Make the time at some point
in the process to meet whom you’re working with. This relationship is one you want
to nurture. Having your personal mortgage banker always watching your largest
asset is a good thing.

8. Chasing Exotic Loan Programs: Shop around for the lowest rate and closing
costs, but not at the expense of your mortgage. Anything that sounds too good to be
true most likely is. If the payment seems too low, you might be paying interest-only
or even negatively amortizing, meaning your mortgage balance is growing each
month. It's best to keep it simple and go with a loan program you can get your head
around, like a fixed-rate mortgage.

9. Forgetting to Lock Your Rate: Keep in mind that a mortgage rate means very
little if it's not locked-in. If you're happy with your rate, lock it. Mortgage rates
change daily and sometimes several times daily. All those mortgage quotes you
obtain are just quotes until you actually tell the bank, lender, or broker to “lock it
in.” Once locked, your rate is guaranteed for a certain period of time, be it 7 days,
15 days, or a month. But never assume your rate is locked until you get it in writing!

10. Not Reading Your Loan Documents: Finally, it's your responsibility to read
and accept the terms of your new mortgage. Sure, it might be a pain to go through
all the loan documents at signing, but it's a bigger pain to sign up for something you
don't want or agree with. Take the time at closing to ensure you understand
everything you're signing, and thereby agreeing to. And don't be afraid to ask
questions! Otherwise, you could wind up with a mortgage with predatory terms and
no place to turn.

                         Robert Wolverton ~ MLO 130385
                         Mortgage Banker
                         425.418.3233 | Direct
                         877.696.6810 | Fax

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