by Hope Teller

Now is the time to start shopping for mortgage rates and properties for you and your family. But first where do you start?  Most people will start researching online for mortgage calculators and quotes that will give them the estimations they want to see – but are those always accurate?  As a homebuyer, you need to make sure you are doing the right research with the right tools.  Before you go out into the real estate market with the wrong protection, read the below possible mistakes that could cause you to lose money and time.

  1. Don’t believe everything you see or read – if you are one of the thousands of people who use the internet as a tool to get mortgage quotes, be sure to always estimate higher than what you see. The rates are not always correct and many times, the mortgage estimates are not including maintenance, MIP if applicable, real estate taxes, etc.  You also have to take into effect your credit score which determines your rate. You do have the option to buy down a rate, but I am sure you want to save money, not spend it. Try and pay off as much debt as you can so that you have a healthy debt-to-income ratio.
  2. Shop for lenders – you may get a quote from lender with one rate and think that that is all you can get. Think again! If you shop lenders, you can find the best rate and the best lender for you and your situation that will help you get the loan you need. They want your business!  The loan origination fees, which also affect the rate, will differ from lender to lender and they may even give you credits. Remember all terms are negotiable.
  3. Waiting – you may come to think that if you just keep waiting, better rates will come.  Well right now, the rates are better than they have been in a long time so you need to take advantage of them fast.  Even if you do not get the lowest rate, you are getting a rate lower than you would have a few years ago or maybe even a few years from now. Don’t focus on the percentage rate but rather on the equity you will build – make extra payments per month, per year, etc, and pay down on the interest. If rates change later on, then you may be able to refinance to get that rate you were waiting for.
  4. Choosing the wrong type of loan – be sure to research the current market conditions to determine the right loan for you. Ask questions such as how long you plan on living in your home? Are you a first time homebuyer? Are you a veteran or a teacher? The market right now favors fixed rates rather than adjustable rates (ARMs) because the rates are already so low which can only mean they may rise. A fixed rate can only change if the real estate taxes or hazard insurance go up. An adjustable rate mortgage makes you depend on the market conditions and tends to be more risky.
  5. Not paying attention to terms – it does not hurt to brush up on loan terminology so that you are not getting a loan blindly. The lender will help you along the way, but it does help if you comprehend what they are saying and you know what you want.

You don’t want to be that person who ends up paying for their silly mistakes on one of the biggest investments of their lives.  Be smart, do your homework, shop around, and be proud of taking that first step toward a new chapter in your life.