Getting a mortgage is not a simple task – it is a complex and time-consuming process, and perhaps the biggest debt that you will ever carry. And as the mortgage rate is an indivisible part of a home loan, homebuyers are always concerned about what the rate will be, and try to get the lowest rate possible. It is because the lowest rate can help them to save a significant amount over the life of the loan.
However, some mortgage mistakes can prevent you from getting the best mortgage rates Houston. Are you wondering what these mistakes are? Here are these:
Misunderstanding mortgage discount points
Most of the homebuyers have the belief that they should always buy discount points when opting for a mortgage. But as mortgage discount points have an upfront cost, which can be recouped through a lower interest rate over the life of the loan, the decision depends on how long you intend to own the home. In some of the cases, you may not plan to remain in the house for long enough to break even after buying points. A discount point calculator can help you with this.
Not comparing the mortgage lenders
Many are in the concept that lenders are required by law to charge the same fees for appraisals and credit reports. Homebuyers often don’t understand that lender fees are negotiable and can vary from a lender to another one. If you finalize the very first lender with who you have communicated, without any comparison, then you may end up by giving a large sum as an interest rate. So, if you are in the search of the best mortgage rate, then you should ask for quotes from different lenders, compare these, and then decide who to choose to apply for a home loan.
Applying for new credit along with the mortgage
If you are planning to apply for any other type of credit before or during the mortgage application process, then skip the idea. When you apply for new credit, you will be seen as greater credit risk, at least at the beginning. If you are planning to apply for a credit card or an auto loan around the same time you apply for a home loan, your credit score might get dinged enough to kill your eligibility to get the lowest mortgage rate. So, you should always avoid applying for new credit when you are planning to apply for a mortgage loan.
Saving too little for a down payment
Most of the mortgage lenders require 20 percent down payment to get their best rates, as well as avoid paying mortgage insurance that is an extra cost, which will be typically added to your monthly income. Although there are lenders who approve home loans even when the homebuyers pay a less down payment, you should not make this mistake. The less the amount of down payment, the more the interest rate will be. So, you should save as much as possible for the down payment to get the least mortgage rate.
The road to homeownership will be easy when you choose the right path. If you avoid these mistakes that many homebuyers usually made, you can protect yourself from financial ruin and buy your dream home easily.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.