It’s easy to make a short list of things you look for in your mortgage lender: great rates, reliable track record, and quality service. When can be harder to divine is the handful of mistakes first-time and even experienced home buyers make when they take out a mortgage loan. Some of these result from miscommunication—or, at its worst—deceit on the part of the mortgage lender. But more often, it’s a simple lack of experience from the borrower that ends up costing hundreds, or even thousands, of dollars.
At Nationwide Home Loans, we’re committed to helping you find the best mortgage rates in Miami Florida. We believe an important part of that is making sure that you have all the information you need to make the most educated decision. It’s something we feel should be a standard service from all mortgage lenders. But then again, we also know we’re a little bit different. Everything we do, we do to improve your experience, help you realize your dreams, and secure your financial future.
Not locking in your rate for closing
We all want things to go smoothly and quickly. This is especially true if you’ve finally found the home you love and can’t wait to move in. Mortgage loans involve a lot of money, so it may take time to finally close on your home. There are a number of moving parts. One common mistake first-time home buyers make is not to leave enough time for closing. Delays in closing can occur for several reasons, including delays by a builder (if you’re building a new home), delays from a title company, or even your own personal foot-dragging in signing paperwork or providing necessary information.
These delays can result in the expiration of your “lock-in” rate. This rate guarantees the interest rate of your loan and typically has an expiration date that extends beyond your closing. (Every loan rate offer will have some expiration date—the offer is based on current market conditions.) If you don’t request your lock-in rate and expiration in writing, some nefarious lenders may try to claim that your rate expired before closing and instead slip a higher rate into your final paperwork. Or, honest delays may lead to the rate expiration. Regardless, requesting your lock-in rate and expiration date in writing—and keeping that paperwork handy—will help you avoid any unwanted surprises when you sign off on your mortgage loan.
When you do close, closing near the end of the month can help reduce your immediate closing costs, as it shifts more of the current month’s interest payments into your next mortgage payment and out of your closing costs.
Choosing the lowest rate, no matter what
Because the mortgage lending industry is highly competitive, lenders often put together a variety of packages that contain a mix of different rates and loan duration. Simply picking the lowest interest rate is not a great strategy. If you’re purchasing your forever-home on a fixed income, a five-year adjustable rate mortgage could expose you to unpredictable circumstances in the future credit market. Mortgages with balloon payments can be even more catastrophic with ultra-low, short-term teaser rates that explode into five-figure balloon payments after just a few years. Long-term, fixed-rate mortgages are the best choice for someone planning to spend decades, not just years, in their new home, even when that means paying a slightly higher interest rate.
The same is true when it comes to making your down payment. You may be able to secure a lower rate by putting more money down. However, if dumping your life savings into the down payment on your home leaves you without cash reserves, will you still be able to cover closing costs? How about a new roof that suddenly becomes necessary? Stretching yourself too thin just to secure a lower rate can dangerous to your long-term financial health.
Not Knowing Your Own Financial Situation
How much money is your checking account? And savings? What will your credit card bill be this month? How much do you still owe on that car? These are all questions that your mortgage lender will research when deciding whether to offer you a loan and how much to approve (not to mention the interest rate). Knowing your own financial situation and credit rating will help you have more realistic expectations about your loan. It’s also an important way to uncover errors in your credit report. Resolving these before applying for a loan could save you thousands of dollars.
As lenders review your financial situation, be sure not to make any major cash transfers, sell your car, or accept large gifts without full documentation and notification of the lender. They’re trying to get a grasp on your financial situation, and major unannounced changes could make it confusing for the lender, resulting in delays and extra paperwork for you, too.
If you still want to chat with an expert about all the potential pitfalls, we understand. That’s why our knowledgeable customer service staff is here for you, and our mortgage professionals are happy to answer any and all of your mortgage questions. We’re passionate about what we do, which is help make home ownership a reality for our clients. We believe helping our clients stay informed is the first step in a successful relationship with a mortgage lender. We are Nationwide Home Loans, and we’d love to be your lender.