monthly expense they will have. Yet most borrowers will do little to no preparation, negotiation, or shopping to get the best deal. And they end up paying much more for their loans than they need to. You? You're smarter than that, or you wouldn't be reading this article. Here are five of the biggest mistakes that can cost you real money.
1. Believing advertised rates are what you'll pay Unless you have perfect or near-perfect credit, most advertised rates are out of your league. To get boasting rights on a rate that good, you have to pay part of a point (one percent of the loan amount) a point, or more to get the best rates.
2. Not comparing lenders Just like everyone knows two or three real estate agents or more, everyone knows a loan officer or a mortgage broker. A loan officer works for a bank or savings and loan and can only offer you loan packages that the bank has put together. A mortgage broker prequalifies you just like a loan officer, and shops your deal around to various lenders.
3. Not paying attention to terms Advertised rates even for those with perfect credit aren't what you will actually pay. The true cost of the loan is the APR or annual percentage rate, which includes fees from the lender.
3. Not paying attention to terms Advertised rates even for those with perfect credit aren't what you will actually pay. The true cost of the loan is the APR or annual percentage rate, which includes fees from the lender.
4. Waiting for a better rate It's great to have bragging rights on a low rate, but you don't want to lose the home of your dreams over a quarter of a point in interest.
5. Choosing the wrong type of loan Many families were hurt post-9/11 when lenders opened the spigots and gave a loan to almost anyone who could sign the paperwork. Suckers bought homes that were too expensive using balloon loans with low teaser rates.
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