Here are some tips on how not to get a mortgage, along with what you should do instead.
- Don't haggle.
A mortgage or a home is just like any other product that people buy. With just a few smart words, you can get a better deal. So haggle!
- Buy when everyone else is, during the busy season.
Buy things out of season, usually in November or December. There may be a "seasonal discount" that you can get. Since sales are slow, mortgage companies and real estate agents will offer better deals.
- Don't bother to read the fine print.
Companies may offer very low prices up front, but in the fine print, they may hide extra fees. Watch out for prepayment fees.
- Think long-term.
Try to make the mortgage term as short as you can. The less time you borrow for, the less interest you pay. Think about a 15- or 20-year term.
- Buy the most expensive home you can (barely) afford.
Try not to give in to your urges. Some lenders will give you as much as six times your income. They are not being helpful. Get the least amount that will make the wife happy. Loan defaults can be the cause of divorces.
- Don't care about your credit score.
Try as hard as you can to raise your credit score. Pay off old loans, and then check your credit report once they're paid off.
6a. A department store credit card is an easy way to build up your credit score. Just charge a few things on it and pay them off as soon as you can. The point is to have good things on your credit report.
6b. Make sure you pay all of your bills on time or early; never pay them after the due date. Pay off your credit cards and keep the amounts owed on them low.
6c. Close credit card accounts you don't use. Slowly close them, not all at once. Only hold on to two credit cards. Your oldest card should be one of these, since it has the longest credit history.
6d. Go to your bank and open a savings account.
- Keep in mind the APR.
Don't get too caught up in comparing APRs and special offers, because they may not show what you will get if you apply. All of this depends on how much money you have.
- Choose the first company that looks good.
The age of a mortgage company is something to look out for. Is it a brand-new group, or has it existed for thirty years?
- Don't plan to buy a house.
Get an expert's full report on the property. Find out how much your home is really worth. Get more than one opinion from different people. A survey costs a few hundred pounds, while a house can cost tens of thousands of pounds.
Make a budget for your monthly spending, taking into account your daily, weekly, monthly, and yearly costs. Find out how much you can really afford to pay each month.
And ...
If an offer looks too good to be true, it probably is. Don't rush into what might be the biggest purchase you ever make. First, check it out.
