Are you applying for a mortgage on your home? Keep in mind that a mortgage is a major financial decision and choosing one will have a significant impact on the rest of your life.
Many people go into this decision without understanding all of the essential mortgage information they need to know, which means that they are likely to make poor choices that will result in paying much more than they need to.
If you want to save yourself from throwing away your hard-earned money, here are a few common mistakes to avoid.
Trying To Bottom Out the Market
Many people try to play day trader and time the market. While this may seem like a good idea, daily market fluctuations are often difficult to predict and could result in unexpected rate increases if the market moves the wrong way. When it comes to locking a rate you are much better off being locked in when rates drop than not locked when rates move higher. If you are locked and rates drop there are often renegotiation options available. If renegotiating the rate is not an option and rates continue to move lower, refinancing in a few months could make sense. In general, rates tend to move higher more quickly than they drop.
If you are trying to time the market make sure you are working closely with a mortgage professional with knowledge of the bond and Mortgage-Backed Securities market.
Forgetting About Closing Costs
In addition to saving up a down payment for your mortgage, don’t forget to factor in the closing costs. These can range from one percent all the way up to six percent of the value of your home. Make sure that you have budgeted for this in advance so that these fees don’t catch you by surprise.
Not Considering All Loan Options
There are many people out there who haven’t considered certain loan products, such as an adjustable-rate mortgage, because they just don’t understand how they work.
However, if you do this you might be missing out on an option that would really work well for you. Make sure you do your research and gain an understanding of the loan options available to you.
Looking At Just The Mortgage Rate
Remember that the mortgage interest rate is only one factor that you should consider when choosing a mortgage. Don’t forget to also consider the time frame of the mortgage, the restrictions on lump sum payments and any other important factors.
These are just a few of the common mistakes people make when choosing a mortgage, so make sure to avoid falling into these traps yourself.
Have questions? Sammamish Mortgage is a local, family-owned company based in Bellevue, Washington. We currently lend in all of Washington, Oregon, Idaho and Colorado. We offer a wide variety of mortgage programs and products with flexible qualification criteria. Please contact us if you have mortgage-related questions.