For many homebuyers, the process of mortgaging appears confusing, filled with thousands of incomprehensible terms.
It daunts them, and drives them to make mistakes.
Keep in mind that a mortgage is most likely the largest debt you'll ever incur, hence demanding your attention and knowledge.
Before you decide on taking out a mortgage, do thorough research.
Acquaint yourself with the terminologies, know exactly what you want, and make smart choices.
To get you on the right track, here are some common mortgage mistakes most homebuyers make.
Understanding these mistakes will keep you from making them, saving you from financial pitfalls.
Not getting pre-approved for a mortgage.
Don't let the excitement of buying a new house make you forget to apply for a home loan.
Approach your local bank and discuss the various mortgages available, and pick one that suits you best.
Make sure you get pre-approved for the mortgage of your choice.
This will save your time and cut short your effort, enabling you to look at houses that fall within your budget.
Getting pre-approved not only gives you peace of mind, but also an edge over other home-buyers.
Not checking your credit score.
Your credit score is of vital importance when applying for a mortgage loan.
Don't walk into a bank without knowing your credit score, as a poor score can disqualify you from applying for loans.
If you've got a low credit score, pay off old bills immediately.
A good credit score enables you to choose among many different mortgage loans, allowing you to finally buy your dream house.
Falling for 'Adjustable Rate' mortgages.
An adjustable rate mortgage offers you a low rate of interest for the first two to five years after taking out the loan.
This typically allows you to buy a larger house than you'd normally qualify for, by paying a lower down payment.
Although this seems like a homeowner's dream, the interest rate witnesses a sharp increase after the stipulated two to five month period.
Borrowers of such loans often find themselves unable to refinance their existing loans, and slowly fall into debt.
Making verbal agreements with the mortgage broker.
Making verbal agreements regarding loans and mortgages will not end well for you.
Make sure that everything you've discussed with your mortgage broker verbally, finds its place on a written agreement.
Jot down the rate quotes, fees, prepayment penalties, and other key terms in order to avoid any surprises in the future.