Mortgage 101: Avoid Common Mortgage Errors

Simple mistakes when applying for a mortgage can be costly so it essential to work with a reputable and experienced mortgage broker.

In all the excitement experienced by first time homebuyers when they find their dream homes, it is easy for them to make small mistakes when they secure their mortgage. These oversights can wind up leaving them “house poor” due to unexpected expenses or paying more for mortgage financing than needed.

Most Common and Expensive Mortgage Mistakes

According to experts, these are some of the most common and costly mortgage mistakes first time home buyers make:

  • Failing to Monitor Credit: Many first time buyers think once they have received a pre-approval from a lender that they can relax about monitoring their credit. Some are unpleasantly surprised when their mortgage application is denied when they try to secure financing for a home. A missed or late bill payment, credit reporting error, or change in debt to income ratio can also mean higher interest rates or the need for a larger down payment.
  • Overlooking Different Mortgage Options: While many first time buyers opt for an FHA loan because of the low down payments, these loans also require costly mortgage insurance. Another option they might want to consider are VA loans, which are available to current and past members of the armed forces. These loans do not require a down payment and the lending criteria is not as stringent. For homebuyers who are purchasing a home in rural area, a USDA loan might be available.

To avoid making costly mistakes, it is best to work with an experienced independent mortgage broker who works with individuals to find the optimal home financing solution for their needs.