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    6 Things That Your Mortgage Lender Will Not Tell You

    It’s no secret that a mortgage is the biggest debt that any individual will carry. This is because a house is the most expensive purchase that most of us will ever make. But the slightest of mistakes while planning a mortgage can turn the joy of owning your own home into a burden. Add to that the mortgage lenders who go out of their way to sway borrowers and do mislead them. So make smart choices and avoid these mortgage mistakes to become a savvy borrower.

    Change in mortgage rules

    The government or the bank may decide to alter the rules for granting loans without a warning that may curtail or eliminate your buyer power. However, it is beyond your ability to exercise any control on this factor. The maximum you can do is to keep tabs on the latest federal and local legislations.

    Increase in debts after applying for a pre-approval

    When you have applied for a pre-approval, it is better to avoid making any large purchases until you have purchased the property. A decision to buy a new car or getting a loan to finance your travel will pull up your debt-to-income ratio that may make you jump over the acceptable limit for a mortgage loan, effectively eliminating any chance of obtaining finance.

    Switching of jobs or careers

    If you nurture any plans of quitting your job and starting your own business, better postpone them, else your dream of getting your own home will be in peril. Wait patiently until the keys of the new home are handed over to you before taking any step that may change your declared source of income.

    Low interest rates

    Do not get fooled by lenders who advertise low interest rates. The rates may look tempting but they will for sure be backed by high fees. This is something that your mortgage lender will never let you in on. Brokers sway consumers by quoting low interest rates and once a borrower gives the go ahead, reality dawns. To be safe, compare the annual percentage rates between mortgage offers and see which one costs the least. 

    Opt for fixed-rate loan

    Beware of adjustable-rate mortgage (ARM). It may look tempting but fixed-rate loans are no longer priced at record lows. So before you go out and grab that ARM, just take a second to ponder on the risks. Initially an ARM might offer a low payment, but it will eventually reset, most likely at a higher rate. Once the rates rise, as a borrower you might not be able to refinance or afford the new payment rates. It is also possible that the housing market could make it difficult to sell. So be safe and opt for a fixed-rate loan that allows you to compare the lowest available rates and fees, easily and quickly.

    Check and fix your credit score

    It’s important to go over your credit reports carefully and examine them thoroughly, because any mistake on your part could lead to either a higher mortgage rate or a loan rejection. If possible check your credit ratings at least 6 to 12 months before you decide to apply for a mortgage. This gives you enough time to rectify your mistakes and improve your credit score. An easy way to improve your credit score is by making all your loan payments on time. Make it a practice to check your credit report with major credit bureaus. Some of them provide free credit-monitoring services to borrowers.

    The unfamiliarity and enormity of taking out a home loan may scare you, but be smart and don’t fall into the trap laid by mortgage lenders that cause you to pay more than

     

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