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5 Mortgage Mistakes To Never Make

When you are planning to purchase a new home or do a mortgage refinance, there is quite a bit to think about and to do.  If you want things to go smoothly, here are five terrible mortgage mistakes you will want to learn about and avoid. 

1. Your first mistake could be not to have the money you will need at closing of your mortgage refinancing process in a bank account where it has been sitting for at least 2 to 3 months.  All the funds that will be due at the closing of the loan including the down payment, bank points and fees etc. need to be seasoned, or in your account for a period of time.   

2. Whether you are mortgage refinancing or purchasing a new home, loan approvals require quite a bit of documentation.  Even if you have plenty of money in the bank and impeccable credit, you will need things like a government issued photo ID, paycheck stubs, recent bank statements, W-2 forms, and even income tax returns for the past 2-3 years.  With all the problems in the mortgage industry, there is more documentation required now than in years past, but federal regulations require it.  Providing the documentation quickly and accurately will speed up your process.   

3. Make sure you find out all the fees, points and closing costs so you don’t underestimate the amount of cash you will need in the bank in order to close.  Although the down payment may be the largest amount you will need, there are lots of other closing costs that will be added in also.  Some of these costs that may be asked for are title fees, lender fees, up to 12 months of homeowner's insurance premiums, and one or two months of the new mortgage payments in reserve.  If you are applying for a bad credit mortgage, you may need even more in reserves. Your lender can give you a pretty close estimate of what all of these costs will be. 

4. Be sure to compare apples to apples when looking into loans with different lenders.  Never compare a simple rate to an APR.  The APR is the best number to use for comparing two different loans because it factors in all of the closing costs.  This will give you a much more accurate comparison.  You should also make sure that the terms of the loans you are comparing are the same.  For example, you would not want to compare a 15 year mortgage loan to a 30 year mortgage loan with a different lender.   

5. Withholding any information at all or not disclosing any information in order to get your financing can be considered fraud.  If you misrepresent the facts on your loan application or if you omit certain facts, you could be guilty of a felony.  This risk will most likely not be worth it.  Simply fill out the application truthfully and to the best of your knowledge, and that will be in your best interest.   

By being aware of these five terrible mortgage mistakes, you should be able to avoid them and make the mortgage process run a lot smoother.  It should also help you get your mortgage loan pushed through in a much quicker manner.