Top 5 Mortgage Mistakes and How to Avoid Them

1. Getting pre-approved without sending documentation

A pre-approval provides proof that you are both willing and capable of buying a home and assures the seller that the sale won't fall through. At PRM we take the pre-approval process seriously. We thoroughly review your financial documentation, in detail, so you know what you may qualify for upfront.

The following documents will need a review before pre-approval:

• Tax returns and W2's from the last two years
• Most recent pay stubs; covering at least the last 30 days
• Most recent bank statements covering at least the last two months
• All current debts
• Full credit report

It is our goal to set you up for success from the beginning and give you a pre-approval that you can count on. Your pre-approval will be accurate and timely and will help you win that competitive edge when making an offer.

2. Accepting an interest rate that's "too good to be true"

Lenders know that low interest rates draw the attention of would-be customers. They often advertise the lowest rates they can get away with. The rate advertised is usually one that no one can qualify for, or you could pay thousands in fees to get that lower rate.

Some lenders catch your attention with the rates of short-term adjustable rate mortgages (ARM). The rate is fixed for a period, called the "initial rate period," but after that, it may change based on the interest rate index. This may or may not be the best, most financially sound option for you depending on how the market acts.

Many different factors make up your interest rate, and every situation is unique. So don't solely focus on the interest rate; the lowest one may end up being the most expensive.

We have a wide array of lending options and experienced mortgage bankers, whose passion is to guide you to the loan option that fits your needs.

3. Picking the lowest rate instead of the right loan for you

It's easy to focus on the loan option with the lowest interest rate, but you should wonder, "Is this the best option for me and my financial needs?" While the interest rate on a 15-year fixed mortgage is lower than a 30-year fixed, the monthly payment is twice as much. Often times people who get a 15-year fixed mortgage end up refinancing to a 30-year fixed because the payment stretched their finances far too thin.

This concept also applies to a short-term adjustable rate mortgage. The interest rate is initially low, but once the introductory period ends, interest rates will fluctuate with the market.

You can see why it's critical that we work together to create a long-term financial plan which we tailor to your specific needs.

4. Trying to time the market

Timing the housing market is just as tricky as trying to time the stock market. It is extremely rare that it works, and you could lose time and money in the process. Mortgage rates are based on mortgage-backed securities (MBS) that can change minute by minute, hour by hour.

Countless factors affect the market, from geopolitical events to inflation, to durable goods orders, making it impossible to time the market perfectly. We follow the MBS market closely and can advise you on when it might be a good time to lock your interest rate.

5. Assuming you can do it yourself

The internet makes a lot of things easier to do on your own; with a mortgage, that is not the case.

Buying a home is an effective and important way to build wealth, and a mortgage is likely the most significant debt you'll ever have. When you're dealing with hundreds of thousands of dollars, even a simple mistake can become very costly.

For important decisions, speed is rarely better than having a professional assess your financial situation and match you to the mortgage that fits your specific goals. Getting a mortgage is not just about filling out a quick and easy application online; it's critical to have a professional who will guide you through the process, helping you to feel safe, secure, and comfortable with your decisions.

If you have questions about the mortgage process, contact us!

Guiding you through the mortgage process is our passion!