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Mortgage Pitfalls
Mortgage Pitfalls
Mortgage Pitfalls - Here are some important factors to consider when applying for or refinancing a mortgage.
There are a number of things a borrower should watch out for when shopping for a mortgage. The first things that come to mind are prepayment penalties, charges for bi-weekly payments and making commitments to payments that possibly can't be afforded.
Prepayment penalties are penalties that mortgage companies assess if a mortgage is paid off within a certain period of time. Often, borrowers fail to recognize these penalties because they don't think their mortgage will be paid off in that period of time. However, they fail to consider refinancing as interest rates drop. Prepayment penalties can often be so steep that it moots the effect of a refinance during periods of low interest rates. Charges for bi-weekly mortgage payments aren't as serious as prepayment penalties but borrowers should be aware of them. If it's important to make an extra mortgage payment adding a little more onto each payment can have the same effect without incurring such a charge. Commiting to payments that a borrower may not be able to afford is a terrible situation. If something doesn't feel right in the mortgage process under no circumstance should a borrower commit to it.