31 Common Mortgage Mistakes Smart People avoid

Guest

Ligroy and Tommy,

My credit score is somewhere around 625. Rest of the details:
Annual Income: near to $60000
Annual expenses: $24000
Home value: yet to do an appraisal for the current value.

miller_st · Joined: 17 Jan 2007 Posts: 917 168.92 Dollars($)

Ronald, are you expecting the value of your home to appreciate within these 5 yrs.? The reason I am asking is that it will then help you to refinance after 8 yrs.

If not, then you will may not have enough equity in the house as interest only payments will not reduce the principal and equity will not build.

How much would be the refinance amount Ronald?

Miller

adonis · Posted: Thu Sep 13, 2007 4:11 am Post subject:

Welcome Mikey,

i think that was a pretty good deal. BTW, is it you who came a few days back and wanted to know something on bankruptcy??

lisascherzer · Joined: 04 Jan 2008 Posts: 755 1.07 Dollars($)

Top 10 Mortgage Mistakes

1.) Taking the advice of only one mortgage broker or lender.

If you do, how will you know that you are getting the best mortgage terms? Even if you do, maybe they do not offer a particular mortgage program that may benefit you even more? Comparing mortgage quotes are vital in getting the best mortgage loan.

2.) Taking a mortgage with an adjustable rate at over 90% LTV (loan to value).

Many people make this mistake just figuring that they will refinance after 2, 3 or 5 years to find out that circumstances have changed and they no longer qualify to obtain favorable rates. Even worse, some cannot get out of the adjustable rate mortgage and then stuck with a mortgage that has increased 2 or 3% thus increasing the mortgage payment to an unmanageable level. Unfortunately, many that are losing their homes to foreclosure took this type of mortgage at a high LTV.

3.) Going with a real estate referral without shopping around.

Many real estate agent, builder or even a friend may suggest the use of a particular mortgage company. Although it's definitely worth a phone call, but always compare with a couple others. You may find out that your referral does not have the best rate or mortgage program for you.

4.) Taking an interest only loan to be able to afford the mortgage payment.

I think this one speaks for itself although there are people that do it every day. Also, never take an interest only loan because you are banking on real estate appreciation. Don't make this mistake, it can backfire.

5.) Going ahead with a "low ball" mortgage quote.

The term low balling is referred to quoting an interest rate without any intention of giving that to you at closing. It may be hard to tell the difference when shopping around. But if it is generally more than 1/8% lower than all the other quotes, it very well could be a bogus quote. Protect yourself by asking for a written lock commitment.

6.) Not shopping around because your credit is not perfect.

There are many lenders that specialize in this type of mortgage loan so you can still shop around for a competitive interest rate. Why pay more than you have to. Compare mortgage quotes to get the best mortgage loan based on your credit.

7.) Not asking if there is a prepayment penalty.

This is a big oversight with most people. Pre-payment penalties can be as high as 6 months interest for as long as 5 years. Take this into consideration when comparing mortgage quotes.

8.) Not getting a rate lock in writing. When a mortgage company tells you they have locked your rate, get a written statement which includes the interest rate, the length of the rate lock and details about the program.

9.) Assuming that the Good Faith Estimate is binding. Most people have heard "get a good faith estimate" when shopping around. This is true, however, most people also think that the interest rate is binding as well. Rates change daily and the interest rate on your good faith estimate does not guarantee that interest rate. See rate lock above.

10.) Getting a home equity line of credit when you plan to refinance your first mortgage in the near future. Especially if your first mortgage is an adjustable rate. Most lenders will see this as a cash out transaction just because you have a second mortgage. Lenders will be more conservative on how much they lend against your home and the rate can be a bit higher. Do not borrow 100% of your home equity on a second mortgage and expect to refinance your first mortgage any time soon.

livinginnky · Posted: Tue Jan 22, 2008 11:25 am Post subject:

lisa,

Good information. I don't know what it has to do with the original post though.

lisascherzer · Joined: 04 Jan 2008 Posts: 755 1.07 Dollars($)

Thanks, most people forget to ask those things and end up getting screwed. I posted it here because the topic is 31 mistakes to avoid, so I thought it fit.

livinginnky · Posted: Fri Jan 25, 2008 9:50 am Post subject:

Sorry Lisa,

I didn't see the first page only the top post on this page. LOL. I did mean it though, good info. The system will probably make it an image though since it is on your other sites.

jbarto65 · Joined: 04 Nov 2007 Posts: 625 0.17 Dollars($)

Thank you for some really good information, this would be good for a new borrower and a person who would like to refinance also. I got a call that the rates are dropping again, did anyone else hear this?

charlesarmbruster · Posted: Wed Feb 20, 2008 11:05 am Post subject:

lisa.scherzer makes some excellent points.

I always make every attempt to inform my client of his/her options -- I try to help them look into the future, too. Most people do not stay in their homes for more than 10-years, just as most people change jobs.

If you are not comfortable dealing with the loan originator/officer with whom you are speaking, SAY SO! -- and, make your intentions known! A good mortgage consultant will identify your wants and try to place you in the contract that fits you.

If your credit and income permit, you can get the most secure product out there with the best rate. It's all about risk, and bad credit and low income will not get the best deal -- it might get an FHA-insured product, however. In the end, honesty is the best policy -- if your loan officer understands your full picture, you both should be able to find a suitable product to either purchase or refinance your home.

jbarto65 · Joined: 04 Nov 2007 Posts: 625 0.17 Dollars($)

Lisa always post some really good informative posts, thanks Lisa

enriko · Joined: 05 Mar 2008 Posts: 68 0.15 Dollars($)

hi Thanks for that

ruthrbns · Joined: 08 Jul 2008 Posts: 1 1.33 Dollars($)

How many of you here have tried to go in for mortgages without having to refinance ? How many of you think it is a boon to do away with refinance ?

"http://inlinebusiness.com/cgi-bin/d.cgi/custsol/se_ret_07.html" Smart Equity

[Link deactivated as per the forum rules]

larry · Joined: 27 Jun 2007 Posts: 3328 474.44 Dollars($)

Hi ruthrbns .

Welcome to the forum.

What exactly you mean to say? Can you explain it to us?

charlesarmbruster · Posted: Tue Jul 08, 2008 10:12 am Post subject:

ruthrbns is advertising a mortgage accelerator program which involves the purchase of software to manage your money in-and-out by paying principal down.....all of which you can do on your own with some rigor and discipline.

Please notice that the linked website was removed by the Community.

jbarto65 · Joined: 04 Nov 2007 Posts: 625 0.17 Dollars($)

charlesarmbuster,
in what situation would one use this software? I am not familiar with it.

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