From watching the mortgage industry over the past few years, it is abundantly clear that some people and some companies unfortunately made some costly mistakes. Most of us know someone who knows someone that has been effected in some way be it loss of a job, or worse case, loss of a home.

More often than not, homeowners incurring the wrath of the current adjustable rate disaster relied entirely on the advice of loan originators whose job was to market the product (mortgage/loan) their company was promoting. Many never sought second opinions (not that this would have impacted their decisions). But the end result, decisions were made in many cases without having all the information they needed to make the very best decision for their situation.

I'm certainly not coming down on the mortgage industry. I'm simply stating that home buyers should base their decisions on as much factual knowledge as possible. And as a Real Estate professional, we should help to provide that knowledge. With that said the following tips from the National Association of REALTORS will help you avoid costly mistakes that are hard to swallow after the fact!

Don't:

1. Choose the Wrong Mortgage: With the advent of instant refinancing, home loans are no longer the lifetime obligations they 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. Confuse "Pre-Approved" and "Pre-Qualified" with a Loan Commitment: These 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 current interest rates -- under certain conditions. Whether pre-qualified or pre-approved, 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 they define each term and what additional steps will be required to obtain a loan.
   
3. This is only the first two of ten DON'TS you should be aware of.