Looking for a mortgage loan? Beware of the pitfalls
It has been a traditional approach by the home loan borrowers to flock to lenders to refinance their mortgage when rates are low, however, for naive shoppers it can turn into a bust. For unscrupulous mortgage brokers and lenders, busy periods make it the ideal time to take advantage of the inexperienced shoppers, by using tricks such as quoting fake rates or adding unnecessary costs in their loans
Laying hands on a mortgage, is more than accepting the offer and signing on the dotted line. According to property consultants, there are seven primary landmines in the mortgage process that traps inexpericned borrowers. Such landmines include:
Overlooking the credit score before initiating
Often loan borrowers approach mortgage lenders without having a clear idea about individual credit score and eventually fall into the traps set for them. Neglecting the credit score often makes individuals lose cash or their potential dream home, This is due to the reason that money lenders probe the credit report of the borrowers with a fine-toothed comb, to determine the creditworthiness of an individual.
Reviewing the clauses reluctantly
With the rise in interest rates, a number of fixed rate loans have turned into fluctuating. According to financial institutions, the fixed interest rates will be restricted to a period of 2-5 years, after which the loan will become floating. However, since the loan tenure is for a longer period, getting it fixed for a small tenure will be of no use. Thus, it is highly recommended to review the clauses of an agreement with care before executing.
Going for a mortgage lender without shopping around
Loan borrowers are prone to choosing a mortgage lender instantly, without background check or reference. In order to kick-start the mortgage process, borrowers do not take reference from friends or coworkers regarding a good mortgage lender, who do not delay with paperwork and always closes the deal on time. Experts recommend to compare minimum 2-3 lenders to get a brief idea about the offerings and ensure that a particular lender furnishes details regarding interest rates, loan terms and break-down of the total cost.
Not getting the important documents upfront
Home loan documents are important set of papers that require special attention. Borrowers often fail to arrange them properly and misplace them or lose them with any financial institution. In addition to it, borrowers often forget to request for a list of the documents submitted to a financial institution, after the loan processing process is completed. This takes a toll on the individual’s credibility and makes it difficult for him/her to apply for any other loan in future.
