3 Mortgage Mistakes Buyers Keep Making

DAILY REAL ESTATE NEWS | FRIDAY, JULY 08, 2016

The mortgage process can be overwhelming to your buyers. David Gunn, mortgage sales effectiveness director for Fifth Third Mortgage, recently shared with HousingWire some of the biggest mistakes buyers make when purchasing a home.

Read moreSet Buyers Straight on These 5 Mortgage Myths

Believing you don't make enough for a down payment.
Low down payment mortgages are becoming more available. The Freddie Mac Home Possible Advantage Mortgage, for example, allows buyers to put down 3 percent on their home purchase. Mortgage lenders can help identify which programs potential buyers can qualify for. "People tell us they can't afford a house because of the down payment," Gunn told HousingWire. "It's the most common barrier to buying a home. But we find that a buyer needs less money than she thinks to get into a home with a monthly payment that meets her budget."

Not having closing time patience.
The timeline for settlement has been growing. Since the Consumer Financial Protection Bureau's Know Before You Owe rule took effect last October, timelines on home closings have lengthened somewhat. The new mortgage disclosure rules can result in three-day delays for reviews if any changes to the mortgage terms arise. "Be patient, and know that all of the changes are made to help you better understand the mortgage terms and help you find the best loan for you," Gunn says.

Sticking to one type of loan.
The 30-year fixed-rate loan -- while the most popular -- doesn't always have to be the go-to. Certain loan types may make more sense, depending on the buyers' situation. "It might be better to get a lower term loan now to build equity, and then move into something bigger in a few years," Gunn says. A lender can take a look at a buyers' financial situation and goals to make a suggestion of whether a longer term or shorter term loan makes the most sense.

Source: "Avoid These 5 Major Mistakes Most People Make When Buying Homes," HousingWire (July 5, 2016)