Avoid Common Mortgage Pitfalls

Allison Beatty
LoanBiz Columnist


The California home loan industry has seen steady growth in recent years, as home owners flocked to take out mortgages for new homes, home renovations and debt consolidation. Before jumping into a mortgage loan, however, think through your financial needs. Here are some pitfalls to avoid:

Borrowing Too Much:

It is easy to get caught in a mortgage frenzy and borrow more than you really need. Before shopping for various California home loans, think about how much you can afford. Look at the following:

• Income--is it steady and/or rising?
• Employment Outlook--How secure is your job? What is the long-term outlook for your industry?
• Savings--Do you have savings set aside to cover 3 to 6 months of expenses?
• Debt--Is your current debt load manageable? Can you handle more?

Paying Too Much For the Mortgage:

There is plenty of competition in the mortgage industry, so it pays to shop around. Even a quarter of a point on your interest rate can save considerably over the course of the mortgage. Closing costs also can vary significantly among different companies and mortgage brokers. Ask for a detailed list of closing costs and compare!

Paying Too Much For the Home:

Although it is difficult to put emotion aside when buying a house, try to think rationally. You rarely win financially when paying top dollar for a house. Instead, negotiate to get the best deal you can find. Ask yourself:

• Is the house reasonably priced for the neighborhood?
• How long has it been on the market? This can give you an indication of how motivated the sellers are.

Moving Too Fast to Close a Deal:

This applies to getting the mortgage and buying a house. Shop around and compare. You could save big on your next California home loan.

About the Author
Allison E. Beatty is a syndicated real estate writer who has been writing home improvement columns for 15 years.