The Worst Mortgage Advice Home Buyers Hear
Buying a home can be a complicated process, and getting a mortgage is arguably the most complicated part. Having a professional that understands your needs will ease the pain of the process. Check out the common bad advice you may receive when getting a mortgage, and follow our solutions.
Don’t bother getting pre-approved for a mortgage
Why you might hear this: You have just started shopping for a home there’s no need to get all serious about mortgages just yet. And besides, a mortgage pre-approval isn’t real anyway— your application isn’t reviewed by an underwriter, so it’s no guarantee you’ll get approved for a mortgage later. So why bother?
Why it’s bad advice: While a pre-approval might not be “official,” it will help you avoid major problems down the road.
Good Advice: Take the time to get pre-approved! By doing this will help eliminate the heartbreak that comes when you fall in love with a house you can’t afford. It can also give you edge if there are multiple offers for the same property.
Get your mortgage from the bank where you already have an account
Why you might hear this: When it comes to convenience, you just can’t beat the bank you’re already using. Plus, since you have an existing relationship with it, it’ll give you the best rates, right?
Why it’s bad advice: You already know to shop around for a home. You need to do the same with your loan.
Good Advice: Call Doug Haldeman at 314-472-3684. Let Doug help you figure out what the best loan is for your personal situation.
Don’t bother reading the fine print
Why you might hear this: Because actually perusing all that mortgage paperwork will drive you insane! And besides, this is the standard contract that everyone gets. Just sign here, here, and here—and you’ll save yourself a ton of headaches.
Why it’s bad advice: Because that fine print contains some clauses that could cost you serious money!
Good Advice: Take your time and go over at the very least these four documents: Closing disclosure, the note, the deed of trust and the first payment coupon. It’s ok if it takes a little longer it will be worth it for you to know that these documents are accurate.
Always go with the lowest interest rate
Why you might hear this: A lower interest rate means lower monthly payments.
Why it’s bad advice: Lower interest rates can have all sorts of strings attached—often in the form of higher fees and potentially worse service. It could also be that they are offering a lower rate because it as an Adjustable Rate Mortgage (ARM)
Good Advice: ARMs are not always a bad thing, but just be on the alert when someone suggests an interest-only ARM these can lead to a payment shock in the end.
In the past, as interest rates were dropping and home values were rising rapidly, interest-only ARMs worked well for some people—especially those who didn’t plan to stay in the home beyond the length of the loan’s first term. But although interest rates are low, they’re likely to rise soon, so beware.
You can always contact Doug to find out more details on any type of loan program.
Borrow as much as you’re approved for, even if you don’t need it
Why you might hear this: Who doesn’t want a bigger and better house? Besides, a bank wouldn’t approve you for all that money unless you could afford to pay it back, right? Right?
Why it’s bad advice: It’s always wise to live slightly below your means, since you never know when life might pitch you a financial curveball, such as a layoff or medical problem.
Good Advice: Be sure to make a budget, decide what monthly payment you’re comfortable with, and stick to it.
Takeaway: You must have a trusted advisor in your corner that will have your best interest at heart and knows what they are doing. Doug Haldeman at Cornerstone Mortgage, Inc can be that advisor give him a call today 314.472.3684.
