Chances are your home is your most valuable asset. You do not want to make a mistake that may cost you thousands of dollars or potentially put your family's home at risk. Close Your Own Loan.com has compiled five of the most common mistakes homeowners make while shopping for a new home loan.
1) Keep it private
Identity theft is the fastest growing crime in the United States. Many Loan Officers, or criminals posting as Loan Officers, will request your personal information including your social security number and date of birth up front. Do not give it to them. Any reputable company will be able to give you a rate and payment quote up front before you give them your personal information. By keeping your personal information secure you will accomplish two things:
a) You will keep your credit score high by avoiding unnecessary credit inquiries.
b) You will keep identity thieves far away from your personal information.
2) Use YOUR judgment
A recent survey of homeowners in foreclosure with adjustable rate mortgages revealed that 85% of them estimated they would not have taken the adjustable rate mortgage had they not been taken into it by a Loan Officer. Often a Loan Officer will try to talk you into an exotic adjustable rate mortgage simply because it pays a higher commission. Do not let their greed determine your next home loan. Explore all of your different loan options yourself in an environment free from sales pressure.
3) Ring, ring, ring …
Have you ever made the mistake of applying on one of these "get multiple quotes from different lenders" websites? I bet you were surprised when they sold your information to dozens of different mortgage brokers who then bombarded you with phone calls for weeks trying to talk you into refinancing with them. Is that what you really want when you go online looking at home loan options? If you wanted to talk to someone on the phone, would not you have called them instead of going online? Do not fall prey to these information brokers.
4) Up front fees
Some mortgage companies will ask you to pay a credit report fee, application fee, or rate lock in fee up front. Any reputable mortgage company will only charge closing costs once the loan has closed.
5) The guessing game
Interest rates fluctuate daily. Many homeowners will see their new rate and payment and decide to wait expecting that interest rates will drop. While you might get lucky and guess correctly, can you actually afford to gamble with your family's home? If the new home loan payment offers substantial savings over your current total payment situation, do not be afraid to lock in your rate and savings. Trying to time the market to save an extra .125% in interest is simply not worth the gamble if rates go higher.
We hope you will find this information helpful in avoiding the pitfalls that those before you have fallen victim to. Please feel free to explore our Interest Rate Guide to learn more ways to lower your rate, improve your credit score and Close Your Own Loan.