By J Krohn
If you avoid these common mistakes you will be well on your way to having done your job-finding the right mortgage for your needs.
• Don't necessarily gravitate to a FIXED RATE MORTGAGE. A perfect example is my son-in law and daughter in Las Vegas. He flies for the Thunderbirds and knew when he got to Las Vegas that it was only going to be for two years then he'd move. So why pay more for something he didn't need. Take the lower rate ARM and go for it.
• PREQUALIFICATION VS PRE-APPROVAL- Know the difference and don't confuse the two. Prequalification is basically nothing. Pre-approval is going thru the whole process of applying for a loan and actually gives you useful information.
• THE TRAP-"how much can you afford"? Once you are pre-approved, some lenders will try to steer you to a bigger loan than you need. When you hear someone tell you you can afford to get a bigger mortgage I'd get my antenna up. You know how much you can afford.
• Avoid loans that have a PREPAYMENT PENALTY. If you do prepay on a loan with such a provision you may be charged thousands in penalty. So stay away in the first place.
• Avoid the 125% LOANS. There are plenty of reasons to avoid these types of loans and their variations. The temptation is huge to borrow more money than the home is worth. But to give an example in today's market, with declining values and a depressed market it wouldn't take too much for you to be in big trouble financially.
• Avoid MORTGAGE LIFE INSURANCE. Insurance is important but mortgage life insurance is an overpriced product. Other products can meet your needs more effectively.
In essence, when you get to the point of getting a mortgage don't be overwhelmed with how easy it is to get more money than you ever thought possible. It is easy. The industry makes it that way. Use your head and keep your cool. Don't be overwhelmed!
Jack Krohn is a leading free lance writer on Home Equity and Mortgage issues with over 40 articles to his credit. He is also the #1 author of Home Security Articles in the country according to Ezine Articles.
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