The Top 10 Mortgage Mistakes Borrowers Make

1. Not knowing which mortgage fees the borrower can and cannot negotiate. Most items in a real estate transaction are negotiable. Learn about every item on the HUD-1 Settlement Statement before ever applying for a mortgage.

2. Choosing and trusting the first loan officer the borrower interviews. Shop around. Get referrals from family, friends, co-workers and others you trust who’ve recently completed a satisfactory mortgage transaction.

3. Using an interest-only or “payment option” adjustable-rate loan primarily to qualify for a more expensive house. In today’s market of slower appreciation and falling prices, such a loan could leave you with a mortgage balance higher than the value of the home.

4. Thinking the interest rate is always the main thing. A host of closing costs may be necessary to get that interest rate. Comparison shop not just the rate but other loan costs.

5. Not comparing the final fees listed on the closing documents to the up-front estimates and good faith estimate to avoid the lender “packing” the loan with added-on fees without the borrower’s knowledge. At least a day before closing, borrowers should ask to see all the loan costs.

6. Not knowing if the mortgage has a pre-payment penalty until it’s too late, like, when the borrower decides to refinance or otherwise pay the mortgage off early.

7. Thinking that renting is always “just throwing money away.” In the short run it can cost thousands less to rent.

8. The borrower does not know if he or she is paying a back-end yield spread or service release premium, fees paid to brokers and loan officers for making loans with higher interest rates.

9. Paying for mortgage life insurance, credit insurance or other expensive but unnecessary lender add-ons.

10. Paying hundreds of dollars to have a company set up a biweekly mortgage payment plan, something the borrower can generally do for herself or himself — at no cost.

Compiled by Ted Janusz

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1 Comment for 'The Top 10 Mortgage Mistakes Borrowers Make'

Ashley

October 10, 2007 | 11:29 pm

It is good to know that people are concerned for this subject. Some people are too wrapped up in the minutiae of life to comment on anything other than themselves!…

1 Comment for 'The Top 10 Mortgage Mistakes Borrowers Make'

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