Even the most seasoned borrowers will admit that they’re guilty of errors in their approach to obtaining a loan for a new home. Here are the Top 10 mortgage mistakes to avoid, whether you’re a first time buyer or simply need a refresher course.

  1. Credit Problems: You don’t know what credit issues may be lurking in your history unless you run your report before applying for a mortgage. Do it early so you have time to address repairs and contest errors.
  1. Applying for New Credit: One of the major mistakes with mortgages is that homebuyers apply for a loan or credit card before or during the mortgage application process. Put off opening new credit accounts until after you buy your home.

  1. Not Knowing What You Can Afford: It’s important to set a realistic budget for a new home, based on what you can supply as a down payment and how much you’ll need to borrow. Take into account your monthly income and expenses so you’ll know what you can afford to pay monthly.
  1. Failing to Consider Your Employment History: A lender wants to ensure that you have consistent income to repay your mortgage, so they’ll check to see if you have been with your current employer for at least two years. Don’t make the mortgage mistake of applying for a loan too early.
  1. Saving Too Little: Saving for your down payment is crucial for a couple of reasons. First, the more you put down for your loan, the better interest rate you get. Second, if you can put down at least 20% of the purchase price you won’t have to pay for costly mortgage insurance.
  1. Moving Assets Around: A big mortgage mistake borrowers make is transferring assets around before starting the loan process. Lenders want to see “seasoned” assets, i.e., those that have stayed put for a couple of months.
  1. Not Getting Timely Pre-Approval: Before you even start house hunting, you should know what you can afford – beyond your down payment and income/expenses amounts. A pre-approval will tell you what interest rate you can expect, giving you a better idea of your new home budget. You’ll also know whether you should save up a little more as a down payment to get a better interest rate.
  1. Going with the First Lender: You wouldn’t buy a car without comparing prices and the same goes for your mortgage. You need to shop around for a lender that will give you the best rate.
  1. Forgetting to Lock in Your Interest Rate: Getting approved tells you what interest you’d be paying if you signed your mortgage that day. But rates can fluctuate between the pre-approval and closing on your new place. Lock your mortgage rate in when you believe it won’t go lower.
  1. Browsing Through Mortgage Documents: Buying a home is one of the biggest investments you’ll ever make, so be sure you know your rights and obligations. If you don’t understand certain provisions, talk with a professional.

Don’t be guilty of these mortgage mistakes. Consider all of these factors as you start thinking about buying a new home – whether you’re shopping now or want to in the near future. Another tip is to talk with a mortgage equity expert to make sure you approach the process properly.