Avoiding these mortgage mistakes will be a big step toward making home ownership a joy, not a burden, and put you on the path to long-term financial security.
Mistake 1. Making yourself house poor.
This story on how much house you can afford provides a more detailed look at how much you should spend.
Mistake 2. Ignoring the true cost of home ownership.
Owning your own home comes with new expenses that surprise many first-time buyers.
If your home is in a special flood hazard area, your lender will require flood insurance. Prices vary by location.
Mistake 3. Not shopping around for the best loan.
Do you check prices with several airlines before buying a plane ticket? Read the grocery store circulars to see who has the lowest prices?
Our extensive database of current mortgage rates is a good place to start your search. It lets you quickly compare the lowest available rates and fees from dozens of lenders.
Mistake 4. Ignoring APR.
Some lenders advertise low interest rates but make up for them with high fees.
The first loan looks cheaper because of its lower interest rate, but it costs more in the long run and requires you to bring more cash to closing.
Mistake 5. Putting little to nothing down.
Most lenders require 20% down to get their best rates and avoid paying mortgage insurance — an extra cost that typically adds $100 or more to your monthly payments.
FHA loans require mortgage insurance until the loan is paid in full.
Mistake 6. Not checking and fixing your credit reports.
Checking your credit report with all three major credit bureaus — Equifax, Experian and TransUnion — is free through annualcreditreport.com.
With below-average credit, the only loan you might qualify for is an FHA loan, which has expensive mortgage insurance premiums for the life of the loan.
Mistake 7. Not going with a VA loan if you qualify.
We think VA loans are the best mortgages for pretty much anyone who can qualify for one.