How NOT to apply for a mortgage

Nobody expects you to know exactly how to apply for a mortgage if you have never done so before. Even if you have, chances are you have only applied a few times in your life - hardly experienced considering guidelines from 1 week ago are now old news!

Here is my list of 10 moves you should NOT make when applying for a mortgage:

1. Spend a few days calling 5-10 mortgage companies - mortgage rates change too fast to spend hours, let alone a few days!
2. Use the phrase, "I'll be making my decision within the next week." - my response will always be, "Well please call me when you are ready and we can discuss the mortgage again". Once again, the industry changes too fast.
3. Ask, "What is the best rate you can give me?" - rates can come with points, no points, adjustable rates, fixed rates, 10 years or 40 years. This is the equivalent of asking, "What's the best price you can give me on a car?"
4. Make the claim, "I can get X rate from Y company". Proooooooooooooooooove it! Get it in writing and we'll match or beat the offer. (Disclosure: I will bet that 95% of the time you will not be able to get the offer in writing)
5. Compare closing costs strictly based on the number - there are actual closing costs, then there are escrows & prepaids. If you don't understand the numbers, ask!
6. Ask to use "your" attorney - unless your attorney specifically works in real estate, you are probably wasting your time. This is like going to a brain surgeon for your ankle surgery.
7. Guess your income - you will over estimate. It happens all the time. Then you will provide documentation that shows otherwise and you will be upset when the loan is declined because your income is "only off by a few thousand".
8. Use all of your savings to purchase/refinance - you will need reserves. Plus, have you ever heard of an "emergency fund"?
9. Follow the "1% drop" rule to refinancing - hint: It does not always hold true. Try to tell me that saving .5% on your 300k mortgage doesn't matter.
10. Rely on newspapers, the news or Internet for current rates - you are wasting your time. It's old news.

There you have it folks, the 10 things I hate to come across in this industry. You may be guilty of a few, but it could always be worse!