Home Mortgage Loan Mistakes
by Robert Skrob,
National Association of Responsible Loan Officers
MISTAKE #1: Over-shopping
Your credit score is based on the
perceived risk associated with extending you credit. Over the years,
the credit reporting agencies have determined that a borrower who
seeks credit from many different lenders is riskier than others.
Therefore, they decrease your credit score each time a lender pulls
your credit report.
Each time you call a lender seeking the best possible rate and terms for your home mortgage, he has to pull your credit report. This is factored into your credit score,
and a lower score decreases your likelihood of getting the best rate
While some consumers are ONLY focused on rates, you should seek the guidance of a National
Association of Responsible Loan Officers member that is willing to
speak with you about your loan options. There are literally hundreds
of loan products available and every borrower has a different
financial situation and financial goal. We highly recommend having a
consultation with your loan officer so they can tailor a program to
meet your individual needs instead of focusing exclusively on rates
and points. You may likely find a better product than the one you
were shopping for.
MISTAKE #2: Trying to hide
past financial difficulties
One of the important services a
responsible loan officer offers is helping you overcome past
financial difficulties that may hinder your ability to have your
loan approved. Your loan officer is on your side.
Supply the information that will
help your loan officer provide you with the best possible rate and
terms and minimize the impact of your past credit history. The fact
that you have recovered from past financial problems makes you a
better risk than others who haven’t yet faced challenges. Overcoming
past financial difficulty proves that you honor your commitments and
don’t give up.
MISTAKE #3: Allowing a loan
officer to put misleading or untruthful information about your
income, expense or cash available for down payments on a loan
application in order to get a loan
Providing untruthful information on
a loan application is fraud. Mortgage fraud is prosecuted by federal
authorities, and they will find out about the fraudulent
information. Do not allow yourself to become an accomplice of a loan
officer’s fraudulent loan application.
Even if a loan officer fills in the
information for you, if you do not believe the loan application is
100% truthful, you should refuse to sign it until the loan officer
corrects the application. While many loan officers try to “help”
borrowers by misstating the facts, the truth is that they are simply
getting themselves and their borrowers into a lot of trouble.
MISTAKE #4: Borrowing more
than you can repay
All of us understand that we may
have to stretch our monthly budgets a bit to afford the homes we
want. However, you will put your entire financial health in jeopardy
by buying a home you simply cannot afford.
If you buy an expensive home and
find you cannot make the monthly payments, you could face a huge
loss when you have to sell that home quickly to get out from under
your mortgage. Or worse, you could be forced into foreclosure or
It is much better to be patient, buy a home you can comfortably afford, make payments, build equity
and then transition into a larger home after a couple of years. Yes,
the larger home will cost more then, but the home you purchased will
also have appreciated during that time. Most importantly, you will
have built a successful financial foundation that allows you to
experience all of your dreams, including that dream home.
MISTAKE #5: Relying on interest rate advertising
Some loan officers use interest rates to get your attention;
however, they may actually end up costing you more. Such rates are
often derived by using a 30-year mortgage coupled with an
accelerated payment plan.
You may decide you like that option, but you cannot directly compare
the interest rate on that mortgage to other opportunities. This loan
could cost more than other mortgages with seemingly higher interest
It is critical to find a loan officer you can trust to review the
options available to you and the best possible rates for your
financial situation. Only a responsible loan officer can give you
all of your options in an understandable way.
Robert Skrob is the executive director of the National Association
of Responsible Loan Officers. Individuals everywhere, looking for
home financing resources can turn to the mortgage loan officer
. You may reach Robert via email to Question