10 Mortgage Shopping Mistakes You Don’t Want to Make
11 June 2024
Shopping for and securing an affordable mortgage loan is no easy feat. It takes time, research, and effort, and considering it’s a commitment you’ll be locking yourself into for the next 10, 15, even 30 years to come, you need to do all you can to ensure you get the best, most affordable deal possible.
Unfortunately, that’s easier said than done. Often, homebuyers jeopardize potential mortgage deals by rushing the process or neglecting essential steps along the way. And in the end, that means a higher mortgage rate than they can afford or, worse, no loan at all. Neither of these is a good option for a prospective homebuyer.
Do you want to make sure your mortgage loan comes through smoothly? That you get a great rate? Whether you’re a first-time homebuyer or looking to refinance your mortgage, make sure to avoid the all-too-common mortgage shopping mistakes listed below.
Should you shop around for a mortgage?
The short answer is yes. A mortgage is one of the largest financial investments you’ll make in your lifetime, so it pays to shop around for a mortgage to get the best deal possible. Even a slight difference in interest rates can add a considerable amount of money over the life of the loan. For this reason, it’s wise to shop around for a mortgage rather than settling on the first offer you’re presented with. While the internet is a good place to start, talking to different lenders can help you understand the loan package best suited for you. Remember, no two mortgages are the same, and quotes can vary from lender to lender. Talk to different lenders about your ideal loan amount, type of loan, and loan terms so you can make comparisons.
While shopping around for a mortgage can be time-consuming, the endeavor pays off. Before you jump into the home loan process, we’ll go over the most common mortgage shopping mistakes to be aware of as you begin your search.
1. Overestimating how much you can afford
Before you start mortgage shopping, you’ll need to know how much home you can afford. You don’t want to waste your time applying for a loan you won’t qualify for or begin house hunting only to find out you’re shopping for a home that’s outside your budget. Monthly mortgages include taxes, homeowners’ and mortgage insurance, and HOA fees, and many borrowers often make the mistake of underestimating their monthly bills by not accounting for these other costs.
You can also use a mortgage calculator to estimate your monthly mortgage payment. A mortgage calculator can help you estimate the cost of a home purchase by allowing you to plug in where you live, your annual income, how much you have saved for a down payment, and what your monthly debts or spending looks like to help you set a realistic budget.
