- Is Your Bank Making Mistakes On Your Mortgage That Is Costing You Thousands??
- Why Should I Bother Checking Up On My Bank?
- So How Do You Check Up On Your Bank?
- You Could Check It By Yourself
- You Can Pay An Accountant To Check It For You
- You Can Get Free or Affordable Software To Check Mistakes For You
- Read Below To Find Out How You Can Check For Mistakes Absolutely Free!
- This mortgage rate mistake could cost you thousands
- Shopping around could save you thousands of dollars
- The interest rate shouldn’t be your only concern
- Common Mistakes Home Buyers Make During the Mortgage Process
- 1. Failing to check credit scores in advance
- 2. Starting the home loan process too late
- 3. Opening or closing lines of credit
- 4. Not saving enough for a down payment
- 5. Focusing too much on the rate
- 6. Buying more house than necessary
- 7. Underestimating the added costs of homeownership
- 7 Mortgage Mistakes To Avoid | Interest.com
- 7 mortgage mistakes to avoid
- 1. Spending too much on a home
- 2. Not shopping for the best rates and loan types
- 3. Failing to check your credit scores
- 4. Making intentional changes to your credit
- 5. Not building your homebuyer’s team
- 6. Skipping the inspections
- 7. Ignoring the hidden costs of homeownership
- The final word
Is Your Bank Making Mistakes On Your Mortgage That Is Costing You Thousands??
Could You Be Giving Your Money Away?
Have you ever checked a shopping docket to find that an item was charged twice or that you were overcharged for something?
Chances are that you have experienced at least one mistake on one of your dockets in your lifetime.
My question to you now is this:
“If your favorite retail stores or super markets sometimes make mistakes then what makes you think you bank never makes a mistake?”
As an investor wouldn’t you check the rent coming into your bank account, and if there was a mistake you would follow it up and make sure you got the money owed to you? Yet almost all investors simply believe that their banks don’t ever make mistakes, and they never check up on their banks to see whether a mistake has been made or not.
Today Tonight has discovered that bank errors are a common occurrence and that they can add up to over 100 million dollars per year! Yikes! This is clearly a real problems and something you should be checking.
Why Should I Bother Checking Up On My Bank?
Banks/lenders are run by people and programs and, as always, neither people nor programs are perfect. Mistakes are often made by people and programs and just because your bank/lender deals with large sums of money ( your home loan) you shouldn’t assume that it would never happen to you.
It is important to check for mistakes on your home loan because a small mistake on your home loan, stretched out over a long period of time can become a big mistake. A simple mistake in the first year of your loan could cost you over six and a half times the initial amount when you stretch it out over a 25 year loan (assuming 8% p.a. interest)
What if your lender accidentally charged you just 0.25% more in interest than you are meant to be paying? A mistake that could be easily made, that is an extra $750/year if you have a $300,000 mortgage or $1,500/year if you have a $600,000 mortgage. Over the life of your loan this simple mistake could cost you tens of thousands of dollars…AND IT DOES HAPPEN!
So How Do You Check Up On Your Bank?
It is a little harder to check up on your bank than it would be to check up on the rents coming in. That is because your mortgage is complicated. Fees, variable interest rates and offset accounts makes it even more difficult to find out if you are being overcharged.
You Could Check It By Yourself
You could go to the bank and talk to them yourself. If there is an obvious mistake they will ly be able to fix it for you and many changes in your costs can be explained to you. You may have a monthly account keeping fee you didn’t account for, or the banks may have raised interest rates higher than the reserve bank.
You could also try to calculate all the expenses you should have paid yourself, but even if you discover a mistake your bank may not accept your findings as fact and may not pay you the refund that you are owed.
You Can Pay An Accountant To Check It For You
You can pay an accountant who specialized in statement checking to check whether the bank has made any mistakes on your mortgage. You can get them to check your mortgage and your statements and see if there have been any errors in calculation.
Accountants don’t come cheap though, so if you are uncertain of mistakes you could be wasting your time and money.
Accountants may prove useful, however, if you find mistakes on your loan using your own calculations or a software program, but the banks won’t take it as evidence.
You can then confirm the mistake by using an accountant and hopefully have an accurate claim so you can obtain your refund.
You Can Get Free or Affordable Software To Check Mistakes For You
This is the easiest and most affordable way to check for mistakes on your mortgage. Software programs calculate the interest and fees you should have been paying over the term of your loan so you can compare them with the amounts on your statements.
You need to make sure that you are choosing a program that is reputable to ensure that your lender will accept the results generated by the program. If the lender doesn’t accept the results then you won’t get your refund.
Check up on your chosen software and look for real life testimonials where people actually got paid by their lenders for the mistakes the software found. Mortgage Watchdog, a software program designed for this very purpose, has many real life testimonials of people who have received thousands of dollars back after using their program.
Read Below To Find Out How You Can Check For Mistakes Absolutely Free!
I hesitate to recommend any software program that may cost you money but that will fail to achieve results. I don’t want my readers (that’s you) wasting money on a program if you don’t need to. That money could be better spent to reinvest in more property or pay down your mortgage quicker.
That’s why I was excited to hear that Mortgage Watchdog have released a free version of their software. You can use this software with no monetary commitment and you can check your mortgage for mistakes that may allow you to get a cash refund.
If mistakes are found then you will need to purchase the software so you can use it to obtain your refund, and if they fail to find anything then you don’t have to pay a dime. This software has been featured on Today Tonight (see the video on the page linked to below.
To trial the free version of this software (obligation free) then simply go to the Mortgage Watchdog Risk Free Trial Page.
Mortgage Watchdog have had over 24,000 customers find problems in their home loans, and less than 500 who have found their home loans to be free of mistakes.
As a serious investor, I think, you owe it to yourself to at least check up on your lenders to make sure that you are paying the correct amount. If you are paying more than you need to then it will slow down your investing and put a strain on your cash flow. Either talk to your banks, speak to an accountant or punch you numbers into a trusted software program.
I hope that none of your lenders have made mistakes. But I hope even more that you will all have the intelligence to check up on your lenders to ensure that they haven’t made any mistakes.
This mortgage rate mistake could cost you thousands
Most Americans have taken a hit to the wallet as a result of the coronavirus pandemic’s impact on the economy. Global poverty could increase by as much as 1.5 percent, and global trade continues to decline. North America is expected to suffer significant losses due to lower trade, according to the United Nations Industrial Development Organization.
The U.S. housing market is also feeling the effects of COVID-19. Interest rates are at a record low, meaning that despite a struggling economy, now might be the best time to score a record-low mortgage rate.
Taking advantage of a low rate could potentially save you thousands of dollars. If you want to get the best deal possible, you should take the time to review multiple lenders. Shopping around is a vital step that many homebuyers skip.
Using an online tool Credible to compare rates is an easy (and free) way to potentially save a lot of money.
Shopping around could save you thousands of dollars
One percent seems such a small number, but it can add up over time. Let’s look at a quick example.
- Lender A offers you a $400,000 fixed-rate home loan for 30 years at a 4 percent interest rate. At that interest rate, your monthly mortgage payment would be $1,909.66. Your total home loan would cost $687,478 over 30 years, and you'll have paid $287,478.03 in interest.
- Lender B offers you a $400,000 fixed-rate home loan for 30 years at a 3 percent interest rate. At that interest rate, your monthly mortgage payment would be $1,686.42. Your total home loan would cost $607,109.81 over 30 years, and you will have paid $207,109.81 in interest.
A simple one percent difference on your interest rate could save you more than $80,000 over the life of your home loan. That’s a lot of vacations or a lot of money you could invest in retirement. Don’t just accept the first-rate offered by a single lender.
If you're ready to purchase a new home, taking advantage of lower interest rates (even if it’s just one percent) could save you thousands of dollars. With Credible's easy online tool, you can compare rates from multiple lenders almost instantly — without any impact on your credit. Check out today's rates below.
MORTGAGE RATES MATTER — HERE'S HOW MUCH JUST A 1% DIFFERENCE COULD MAKE
The interest rate shouldn’t be your only concern
While your mortgage interest rate will ly have the most significant effect on your loan, it’s not the only number you should consider. When you’re researching different lenders, don’t forget to ask them about fees and other associated costs. See what kind of rates you qualify for today through Credible.
WHY IT'S A GOOD IDEA TO REFINANCE YOUR MORTGAGE WHILE RATES ARE LOW
Typical fees associated with a mortgage loan include (but are not necessarily limited to):
- Origination fees and/or lender charges
- Any fees for purchasing points to score a low rate
- Closing costs
- Government fees
- Deposits ( an escrow)
- Early payment penalties
- Appraisal fees
- Home inspection fees
- Attorney’s fees
You can pay some of these up-front, while some lenders allow you to wrap these expenses into your loan. Adding the fees to your mortgage could increase your loan balance, monthly mortgage payment, and total paid over the life of the loan.
Don’t forget to check out the listed annual percentage rate (APR) with lender offers. Percentage rates represent the total cost of your loan, minus some fees. The APR can offer a broader look at how much your mortgage will cost.
FED’S EMERGENCY RATE CUTS AFFECT MORTGAGES — HERE’S HOW YOU CAN BENEFIT
Buying a home is an expensive investment, but that doesn’t mean you have to pay top dollar for your purchase. Spending a little extra time reviewing lender options could save you tens of thousands of dollars.
You can maximize your savings by using an online tool, Credible, to compare multiple lenders and loan options in one place. Make sure to have a notebook handy and take note of the interest rate and fees each lender presents.
To qualify for the best rates, here are a few things you should do:
- Get your credit score in shape: You’ll have better luck qualifying for lower interest rates with a credit score of at least 680.
- Have a low down payment: While you can get loans with no down payment, offering at least 10 percent could help you get a low rate.
- Consider multiple lender options: You can apply for mortgage loans through credit unions, banks, mortgage brokers, or private lenders. Review each option to see where you can get the best loan terms.
- Ask questions: Don’t be afraid to ask questions. Taking out a mortgage loan influences your future. Thorough research can make a big difference later.
Common Mistakes Home Buyers Make During the Mortgage Process
The home loan process can be daunting — especially if you’re a first-time home buyer who doesn’t know what to expect. Fear no more. We took some time to discuss common home buying mistakes that happen throughout the mortgage process, to better prepare you for what not to do.
1. Failing to check credit scores in advance
Your credit score represents your overall credit history, and lenders consider it as a key indicator of how ly you are to repay your mortgage. So, the higher your score, the better interest rate you’ll receive simply because you’re considered a more trustworthy borrower. This can save you thousands of dollars in interest over the life of your loan.
Before starting the mortgage application process, be sure your credit score is healthy. To accomplish this, lower your debt, make (debt) payments on time, and limit your credit applications. And of course, check your credit score. It’s something you can do for free without affecting your credit.
Curious how credit scores affect interest rates? Learn the basics and save a ton in the long run!
2. Starting the home loan process too late
An American Financing sales manager says, “One of the most common home buying mistakes is that people tend to start the process backward. We always suggest getting financing approved before the home search. This allows us to assess your needs and get you quickly pre-approved.
Every now and then, customers call in and say that they want to put an offer in on a home, but are not approved. While it’s perfectly acceptable to find a home first, there’s only so much we can do in a short time before another buyer — with pre-approval — comes in and gets their offer accepted. This is especially true in hot, seller’s markets Denver.
That’s why we always recommend getting approval going 30-60 days prior to shopping.”
Let’s consider the stumble across your dream home scenario. Say you’re passively searching for homes and surprisingly come across everything you’ve always wanted and more. Talk about a piqued interest level.
The price point seems reasonable, so you begin actively researching mortgage lenders to see where you can find the best rate, hopefully in the shortest amount of time.
Only now you find out, your spouse’s less than perfect credit, or your rather high debt-to-income (DTI) ratio is limiting the amount to which you qualify. It can be heartbreaking. Avoid it altogether and learn upfront about what you can afford.
Not ready to start the home loan process? Consult a home affordability calculator.
3. Opening or closing lines of credit
Once you receive mortgage pre-approval or have an offer accepted, you may think it’s time to start shopping for new home decor. Do so in moderation. You don’t want to fall into the trap of signing up for a new credit card to cover these expenses. By opening a new line of credit prior to funding your mortgage, your credit score takes a hit, even if you don’t end up using the card.
Let’s say you end up using the card, and you charge hundreds or even thousands on it. You’ve now increased your debt, which affects your DTI. If you’re DTI is too high, you risk losing mortgage approval.
4. Not saving enough for a down payment
There are a lot of affordable loan programs that require 10%, even 3.5% down payment. Still, on a $300,000 house, that can cost over $10,000 (and does not include any mortgage origination fees or closing costs). Even with help from down payment assistance grants, home buyers still need some money down.
Let’s not forget: the more you can put down, the less ly your chances are of having to pay monthly mortgage insurance. And, the less you put down, the higher your monthly payment. You’ll want to strongly consider your financial situation and talk it through with an advisor or mortgage consultant before falling in love with a home that’s your budget.
5. Focusing too much on the rate
An American Financing sales manager says “a lot of home buyers — and even homeowners looking to refinance — spend too much time concentrating on the rate without regard to anything else. Don't be driven by interest rates. In a lot of cases, a lower principal balance with fewer fees has a lower payment than a lower rate with higher fees.”
Not to mention the fact that interest rates generally don’t move much. The right property comes along rarely enough that overemphasizing rates can cost you — especially now, where home prices continue to rise around the country.
To put things in perspective, rate increases raise monthly mortgage payments but not as much as home buyers expect. A quarter-point change isn’t ly to alter the monthly payment on your mortgage by more than $20-$30, at the most. For example: on a $200,000 home with a 30-year mortgage, the expected increase of a quarter of a point translates to paying roughly $30 more per month.
6. Buying more house than necessary
Another common home buying mistake is falling in love with a house you can barely afford. An American Financing mortgage consultant says that “buyers find the most long-term success when figuring out what they can afford, how much they can put into a down payment, and then sticking to the plan. Creating a budget and determining a comfortable monthly payment is key.”
Just because you are approved for a higher loan amount does not mean you have to overextend yourself.
Live within your means, and you'll be better prepared to avoid financial losses. If something were to happen and you needed to quickly sell or rent the property — remember, markets change. If you bought the largest home in the neighborhood, that might not help when it comes to selling.
Buying a home is ly the biggest purchase you’ll make. A good rule of thumb is to spend 28% of gross income on housing.
7. Underestimating the added costs of homeownership
Don’t become house poor by purchasing too much home. You’re going to experience utility bills, potential issues ( a water heater or roof replacement), and even home furnishing costs. According to a recent report shared by Zillow and Thumbtack, small overlooked home expenses can cost homeowners an average of $9,080 a year.
Quick tip: Prevent issues by following a home maintenance checklist.
Take your time to prepare before committing to a home investment. Always remember you have options. Options in mortgage lenders, properties, realtors, and loan programs.
When you’re ready to experience the journey toward homeownership, choose to work with a company that has your best interests in mind and is focused on your schedule.
Be sure to ask the right questions before buying a home, and of course, enjoy the experience!
Want to learn more? Schedule an appointment with a mortgage consultant.
Let's talk soon!
7 Mortgage Mistakes To Avoid | Interest.com
Due diligence in the home buying process is crucial to avoiding the biggest mortgage mistakes. Just a few simple mistakes could cost buyers thousands of dollars on a new home purchase.
Editorial Policy Disclosure
When searching for a new home, you may begin by counting bedrooms and bathrooms. But other factors are even more important to take into account if you want to avoid the biggest mortgage mistakes when buying a home. Paying even 0.5% higher in interest on a $250,000 mortgage for 30 years can cost you over $25,000 over the life of the loan.
Start your path to homeownership the right way and secure a financially sound mortgage by avoiding the most costly mortgage mistakes for borrowers.
7 mortgage mistakes to avoid
Buying a home can be a tricky process, and mistakes in this process can follow you for the life of your loan. By avoiding the following mortgage mistakes, you can feel confident in making smart financial decisions during the buying process, leaving you better positioned for long-term financial security.
1. Spending too much on a home
Lenders are legally prevented from approving mortgages that are more than 35% of your household income, but most financial advisors recommend mortgages that are no more than 28% of your income.
Just because you can get approved for a larger mortgage doesn’t mean it’s a good idea, and many households with mortgages equaling 30% or more of the family income find themselves “house poor” — which means their monthly mortgage leaves them so strapped each month that one unexpected emergency could result in financial disaster.
2. Not shopping for the best rates and loan types
Many home buyers look at multiple homes before choosing the “perfect” one, but most never give a second thought to putting the same effort into shopping for the perfect mortgage. Different lenders offer different rates, have different fee structures and run different promotions. By comparison shopping, you can save thousands over the life of your loan.
You should also make sure that you choose the right loan for your needs.
For example, the low fixed interest rate that comes with the first part of an adjustable-rate mortgage may seem tempting, but if you’re planning to stay in your home over the long haul, the fluctuating rate that follows may end up costing you more than you bargained for. So make sure you check out all the options and find the right one for your needs.
Worried that multiple credit checks from shopping around will hurt your chances of approval? Finance companies expect customers to shop around, so as long as you do all of your shopping within a 30-day window, it affects your credit the same as only shopping with one lender.
3. Failing to check your credit scores
One of the biggest factors in your approval for a mortgage loan is your credit score. The credit bureaus are notorious for assigning rapid score decreases for even one late payment, but it can take months of on-time payments to improve your score.
You can get a free copy of your credit report from each credit bureau every year, so take the time to review your reports and correct any inaccuracies before shopping for your mortgage.
4. Making intentional changes to your credit
Before you decide to pay off that old medical bill, trade in your car or close out a credit card, check with your finance company first. Some borrowers mistakenly think that closing out a credit card or paying off old bills will improve their credit, but in some cases, those intentional changes can hurt you.
For example, spending $2,000 to pay off your car loan may only improve your credit by one or two points, and at worst, it can actually cause your score to decrease.
Instead, you may be better off putting that money toward the down payment on your home.
Your mortgage lender is in the best position to advise what, or what not, to pay off if you have existing debt, so be sure to get guidance before making any significant money moves.
5. Not building your homebuyer’s team
Buying a home is not a solo activity. Building a strong team that advocates for you can mean the difference between a successful transition into your new home and several months of frustration and missed opportunities.
Your real estate agent and mortgage lender will be your primary contacts, but there are countless other underwriters, inspectors, appraisers and advisors who will be involved in the process.
You aren’t ly to already know a trustworthy advocate to fill each of these roles, so it’s important to start with a reputable real estate agent who can recommend qualified people to help you build your strong homebuyer’s team.
6. Skipping the inspections
According to Home Advisor, repairing a cracked foundation can cost $10,000 or more. You don’t want to be caught with major repairs or hidden damage, and home inspections are your insurance ticket to avoid major issues when buying a home.
General home inspections aren’t the only inspection available to you during the buying process.
You can also choose to get a property survey, termite inspection, electrical inspection, septic system inspection and other inspections.
While you shouldn’t necessarily throw your money away on every inspection under the sun, opt for the general home inspection and add on more specialized inspections if your general inspector finds cause for concern.
7. Ignoring the hidden costs of homeownership
If you’re expecting that the downpayment will be the only expense at closing, you may be in for a huge disappointment. During the homebuying process, there are countless other expenses that may fall on you to cover at closing if they aren’t covered by the seller. That’s yet another reason to build a strong team that can negotiate some of these expenses for you.
At a minimum, be prepared to pay for your home inspection, appraisal, initial escrow deposit, title fees and loan origination fees on top of your down payment. In addition, plan for other expenses after you purchase your home, such as routine maintenance or a home warranty.
The final word
Buying a home involves much more than finding a home with granite countertops and beautiful landscaping. By doing your homework in all aspects of the mortgage process, you can avoid the biggest mortgage mistakes and get yourself in a good financial position to handle all of the challenges that come with being a homeowner.
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