Grand County: Things to think about while choosing a mortgage | SkyHiNews.com

Grand County: Things to think about while choosing a mortgage

Brenda Kellen
Thoughts on Real Estate

Getting a loan can be overwhelming and confusing.

Be careful to look out for these four common mistakes.

1. Choosing the Wrong Mortgage: With the advent of instant refinancing, home loans are no longer the lifetime obligations they used to be. Still, you don’t want to be saddled for even a short period of time with the wrong one. Investigate all your options, then lay your choices side-by-side and do the math, making sure to compare worst-case scenarios. Be sure to look at initial interest rates, future interest rates and payments (if different), and the possibility of prepayment penalties.

2. Confusing “Pre-Approved” and “Pre-Qualified” with a Loan Commitment: These are debatable terms in real estate because not all lenders apply the same definition to each expression.

In fact, one leading real estate dictionary contains neither expression because their definitions are uncertain. According to one school of thought, however, when you are “pre-qualified,” the lender is making an educated guess about how much you can borrow based on information you’ve provided.

When you are “pre-approved,” the lender has verified everything you have told him or her and is offering to lend you up to a given amount at current interest rates ” under certain conditions. Whether pre-qualified or pre-approved, final clearance and a check at closing ” a loan commitment ” are subject to an appraisal satisfactory to the lender, good title, a last-minute credit check, and other verifications. When meeting with lenders, always ask how they define each term and what additional steps will be required to obtain a loan.

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3. Having Too Much Credit: Excessive credit is almost as bad as no credit or even bad credit. Even if you pay your bills on time, lenders tend to focus just as much on how much credit you have available to you as they do on timeliness.

So, being up to your ears in car loans and credit cards is a sure way to be turned down for a mortgage. Postpone any big-ticket purchases until after you buy your house.

4. Lying on Your Loan Application: Exaggerating your income on a mortgage application or putting down other untruths can be a federal offense. Lenders rarely prosecute liars. But if they find out later, they can call your loan due and payable.

Also, never sign your name to a loan application that is not completely filled out. Loan officers have been known to stretch the truth to get a client approved, but it’s the borrower who ends up paying the price, often in the form of monthly loan payments he can’t afford.

One last thought: Always get a Good Faith Estimate from your lender. This will show the charges for making the loan, the interest rate and the term.

– Advice provided by Lew Sichelman at Homestore.com

” Brenda Kellen can be reached at (970) 485.1115 or brenda@tombrenda.com.

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