They Don’t Compare Lenders

It is easy to go with a lender you know, possibly even the lender who financed a previous mortgage. However, it’s always best to get several quotes from different companies in order to ensure you’re getting the best interest rate. A higher interest rate could cost you thousands of dollars over the life of the loan.

They Don’t Have Their Home Inspected

Having your home inspected can cost several hundred dollars, but it can save you thousands of dollars in the long run. Inspectors can check for things like bad wiring, weak foundations, mold, etc. These problems can cost you thousands of dollars to repair, so it’s best to either avoid homes with these types of problems or plan on the costs of repairing it in the total amount you’re willing to spend on your mortgage.

They Borrow More Than the Home Is Worth

When you borrow more than the appraised value of your home, it represents a higher risk for your lender. Higher risk loans equal higher interest rates. Many borrowers take out higher amounts on their mortgage loans to make improvements on their home, assuming that its value will increase after the improvements are made. However, your lender will not calculate your interest rate based on what improvements you’ve made; they will base it on the value of your home before you purchase it. So, unless you plan to refinance within a few years, it’s usually better to borrow less and save money for improvements.

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