1. Choosing the Wrong Mortgage.

With the advent of instant refinancing, home loans are no longer the lifetime obligations the used to be. Still, you don't want to be saddled for even a short period of time with the wrong one. Investigate all your options, then lay your choices side by side and do the math, making sure to compare worst case scenarios. Be sure to look at initial interest rates, future interest rates and payments (if different), and the possibility of prepayment penalties

2. Confusing "Pre-Approved" and "Pre-Qualified" with a Loan Commitment.

"Pre-approved" and "pre-qualified" are debatable terms in real estate because not all lenders apply the same definition to each expression. In fact, one leading real estate dictionary contains neither expression because their definitions are uncertain. According to one school of thought, however, when you are "pre-qualified," the lender is making an educated guess about how much you can borrow based on information you've provided. When you are "pre-approved", the lender has verified everything you have told him or her and is offering to lend you up to a given amount at the current interest rates - under certain conditions. Whether prequalified or preapproved, final clearance and a check at closing- a loan commitment- are subject to an appraisal satisfactory to the lender, good title, a last minute credit check, and other verifications. When meeting with lenders, always ask how the define each term and what additional steps will be required to obtain a loan.

3. Having Too Much Credit.

Excessive credit is almost as bad as no credit or even bad credit. Even if you pay your bills on time, lenders tend to focus just as much on how much credit you have available to you as they do on timeliness. So being up to your ears in car loans and credit cards is a sure way to be turned down for a mortgage. Postpone any big-ticket purchases until after you buy your house.

4. Lying on Your Loan Application.

Exaggerating your income on a mortgage application or putting down other untruths can be a federal offense. Lenders rarely prosecute liars. But if they find out later, they can
call your loan due and payable. Don’t ever sign your name to a loan application that is not completely filled out, either. Loan officers have been known to stretch the truth to get a client approved, but it’s the borrower who ends up paying the price, often in the form of monthly loan payments he or she can’t afford.

5. Hiding If You Can’t Make Your Payments.

The worst thing you can do is ignore phone calls and letters from your lender when you are behind on your payments. Lenders have many options at their disposal to help keep borrowers from losing their homes to foreclosure. But they can’t do anything for you unless they can talk to you about your difficulties. Lenders are the enemy only if you give them no other choice.