Avoid These Common Mortgage Mistakes

by Carolyn Kay 02/02/2020

One of the biggest hurdles people face when looking for a home is applying for a mortgage. While applying for a mortgage is relatively straightforward, finding favorable terms might be more challenging. Many buyers are surprised by how broad the terms of a mortgage might be. With this in mind, it is critical to understand the most common mistakes people make when looking for a mortgage.

Not Looking Locally First

The most common mistake people make when looking for a mortgage is not looking locally first. Many are tempted to use the internet to seek out a loan. While there is nothing wrong with looking around (in fact, this is encouraged), don't forget to head to the traditional bank or credit union a few miles down the road. There are professionals who are interested in building a relationship with the local community often providing more favorable terms.

Assuming All Mortgages are the Same

Don't assume all mortgages are the same. This is far from accurate. Applying for a mortgage can be an involved process that people rarely want to do this more than once. You may assume the next lender will offer similar terms. In reality, some lenders might be willing to wave origination fees or points on the mortgage. Some might even offer a lower interest rate, be sure to ask what special offers may be available.

Not Locking In the Rate

One of the common questions people face when applying for a mortgage is whether or not they would like to lock in the rate. The fear of locking in the rate is that, if the mortgage rates drop, they might miss out on the opportunity to save money. On the other hand, people also forget the alternative. The rate might actually go up. The downside to this is that their monthly mortgage payments may not be affordable anymore. Go ahead and lock in the rate.

Not Putting Enough Money Down

Lastly, many try to save money by not putting enough cash down. When you don't put enough money down, you may end up with a higher interest rate and a higher monthly mortgage payment. Additionally, you may have to purchase Private Mortgage Insurance, also known as PMI, for the lender making the monthly payment even higher. To prevent this from happening, make sure the down payment is large enough to satisfy the lender, usually between 10 and 20 percent.

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About the Author

Carolyn Kay

As a Real Estate professional, I specialize in helping my clients buy, rent or sell properties in Westchester County. I am passionate, dedicated and committed to my clients and my first priority is to provide them with first class service and guidance throughout the entire process. It has been said that I go above and beyond for my clients to get the deal closed! I have experience working with clients who have financed their purchases with either a conventional, VA or FHA loan and have a good understanding of how they work; no sale is too big or too small for me to take on. My family and I relocated to England for 2 ½ years, this was a wonderful experience but at the same time, it was overwhelming. I have first hand knowledge of the challenges as well as the positives in discovering a new community. I was born and raised in Scarsdale and once married, my husband and I decided to raise our two daughters here. Both of our daughters successfully graduated from the Scarsdale schools and are both married, living and working in Manhattan. After living in the same house for 30 years my husband and I took the leap, sold our home and bought and renovated a condo townhouse in another town. Once again we are discovering a new community and fully understand the highs and lows of selling a home we loved and buying and making a new home. I feel that my personal real estate experiences have made me more in tune with my client’s needs and therefore better able to help them navigate through the complex process. Please call me so that I can put my knowledge and experience to work for you.