Five Common Pitfalls When Getting A Home Mortgage

Owning a home is a lifetime dream for many. The best way of acquiring a loan is with the help of a home equity mortgage. You will also sometimes feel the requirement to get some finance by providing your home as collateral. There are some fine points to look before you sign up for a loan by providing your home as guarantee.



Pitfall number 1: Dealing with wrong people



You have heard enough of frauds and cheats. Financing your requirements with unscrupulous can cause you lose the equity you build up and your home as a whole.



Don't talk finance with any party that asks you to claim more income than you actually have and to apply for higher amounts than you require. Such people are also likely to sign unfilled forms, not allow you to keep a copy of the documents you sign and most importantly put pressure on you to pay huge monthly payments than you could afford, usually at a later stage of loan approval.



Pitfall Number 2: Not Keeping a Good Credit Score While Applying for Home Equity Mortgage



Major credit purchases immediately before you apply for loan can affect your score.



Not caring too much about your credit score for a long time can damage your credit scores and you will not be able to quickly build up the damage. Healthy credit score is always desirable to get lower interest on home mortgage too. However, succumbing to the pressure of the first lender that sites your average credit score as reason for higher interest is also a major pitfall you should avoid. If the credit score is affected due to inability to repay a credit due to illness or temporary loss of job, you can still shop around and negotiate your way to low interest home mortgage.



Pitfall Number 3: Allowing a lot of credit Companies Check your Credit Score



Equifax, TransUnion and Experian are the main credit rating agencies. Ordering your own credit score can cost you $ 40. Your credit score drops a little with each credit check by lending companies. If you shop around and allow all the companies to check your credit score, it can drop considerably, disqualifying you from lower interest mortgage. Allow only the company you zero in on for your financing requirements to check your credit score.



Pitfall Number 4: Holding Back Information about your Credit History from Your Broker



Once you choose to deal with a mortgage broker to find a good home equity mortgage, you must talk with him if you had any credit problems in the recent history. If you try to misguide the broker, you will be in a bad light to getting a mortgage. If you describe your situation well, chances are higher that he will find a low cost loan to you.



Pitfall Number 5: Overlooking Overages and giving up the power of negotiation



Overage is the difference between lowest available price for the mortgage and the higher price the buyer is willing to pay.



Lenders or brokers can keep the whole of or a part of the difference as additional compensation. Ask your broker(s) how much he gets as compensation.



Copyright ฉ 2006 Joel Teo. All rights reserved.

Mortgage Calculator Helps You Find The Right Mortgage

Your dream house may not be everyone else's idea of "Home, Sweet Home," but it's going to be all yours.



Now if you can just figure out how to finance that bit of real estate. Not wanting to leave any stone unturned, you're on this site to get some background for your decision.



One kind of mortgage calculator ("how much house can I afford" type) takes a look at your budget and, with your input, works out how much you can afford to pay, either monthly or annually. Some are not comprehensive enough to take into account taxes, insurance and the increased costs of homeownership.



It's worth your extra time to pull up several of these mortgage calculators and run your numbers through them for comparison. Then you're ready for the next step.



The fixed rate mortgage gives you the same monthly payment for the life of your mortgage. That's what you just worked through. This means you can set up your household budget more precisely and have greater control over how your money is spent.



A "how much can I borrow" mortgage calculator helps you work out how much you can afford to pay for the house altogether.



Can you afford that dream home? Maybe yes; maybe no.



It also depends upon the interest rates you negotiate with the lender, an increase in the size of your down payment, the number of years you want the note for and the actual price you negotiate for the house.



Using the mortgage calculator, you can input these factors individually and see what happens to your bottom line. A small additional prepayment to your regular mortgage payment may be what pushes you over the top.



A prepayment mortgage calculator can show you what it means over the life of your note. The beauty of the prepayment is that it is optional, not contractual.



Unlike an Adjustable Rate Mortgage (ARM), you are not locked in to an increase every one to five years. You're only responsible to make the original mortgage payment. If you are not so financially constrained with a monthly budget, and prefer to have a lower rate of interest to start, then use an ARM mortgage calculator.



This will give you a rough idea of monthly payment over a period of time. ARMs do have the distinct disadvantage of putting your home in danger financially should the interest rates rise dramatically.



You need to use the mortgage calculator to find out what your optimum interest rate would be before you reached that financial crisis. Make sure that the price of the house you buy gives you quite a large safety net so that the interest rate can rise without danger. The beauty of mortgage calculators is that you get experiment before committing anything to paper or even speaking realtors or lenders.



You find the information you need to complete the mortgage calculator's questions by using your own financial information, an approximate house price and the rates advertised on any piece of junk mail that's arrived in your mailbox. You work in the privacy of your own home without the fear of being hounded by a salesman doing follow-ups!



Take the preferred options you worked out on the mortgage calculator with you when you begin discussions with the broker.



It's proof of your intentions and serves warning of your willingness to follow up on those you're negotiating with.