Top Mortgage Don'ts

Top Mortgage Don'ts

Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience
, Trusted Mortgage Expert with 45+ Years of Experience

Getting approved for a mortgage can be a challenging process.  A mistake or the wrong decision can cost you thousands of dollars, or even worse, prevent your loan from closing.  There are several common mortgage don'ts that borrowers should be aware of to make sure the process goes as smoothly as possible.

Common mortgage don'ts that cost borrowers money include not comparing lenders or only getting one loan quote instead of shopping for your mortgage more extensively.  Issues that can prevent your mortgage from getting approved after you have submitted your loan application include changing jobs, making a major purchase or applying for another loan.  These missteps can impact your employment, income, monthly debt and credit score, all of which can disqualify you for a mortgage.

On a more general level, major mortgage don'ts include getting a loan you cannot afford, selecting a mortgage program you do not understand or lying on your loan application.  These are significant errors that results in you losing your home or even worse in some cases.  For example, if you cannot make your monthly mortgage payment you could end up defaulting on your loan.  If you lie on your application you could end up in jail. 

These examples show that when it comes to getting a mortgage, knowing what not to do is equally important as knowing what to do.  Understanding the major errors and missteps that frequently trip up borrowers enables you to make smarter decisions throughout the mortgage process get your loan approved faster.  Being aware of the top mortgage don'ts and knowing that not to do when you get a mortgage can save you time, money and frustration.


Use a Lender Just Because Your Friend or Realtor Referred Them

Getting a lender referral from a friend, colleague or realtor can be helpful but that should not be the only reason to select a lender. Borrowers should shop multiple lenders to find the best loan terms, which means the lowest combination of mortgage rate and closing costs. Too often borrowers fail to shop around and rely solely on a personal referral to choose a lender. Paying a higher mortgage rate or closing costs can end up costing you thousands of dollars. You may end up selecting a lender that someone refers you to but make sure to explore other options including different types of lenders such as banks, mortgage banks, mortgage brokers and credit unions.

You can use the table below to compare mortgage rates and costs for leading lenders in your area.  Shopping multiple lenders is the best way to save money on your mortgage.

Current Mortgage Rates in Ashburn, Virginia as of November 29, 2023
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Rate data provided by RateUpdate.com. Displayed by ICB, a division of Mortgage Research Center, NMLS #1907, Equal Housing Opportunity. Payments do not include taxes or insurance premiums. Actual payments will be greater with taxes and insurance included. Rate and product details. Data provided by Icanbuy. Payments do not include amounts for taxes and insurance premiums. Read through our lender table disclaimer for more information on rates and product details.


Obtain a Mortgage Quote from Only One Lender

The best way to save money on your mortgage is to compare quotes from multiple lenders. A study showed that people who compared five mortgage quotes saved an average of $3,000 on their mortgage. People who only compared two lenders saved an average of only $1,400 on their loan. This means that people who only contact one lender are probably spending too much money which makes this a definite mortgage don’t.

You comparison shop to find the best deal on a car, hotel or television and shopping for a mortgage is no different. When you request a quote from a lender you can ask the lender to not pull your credit report so your credit score is not negatively impacted. Reducing your mortgage rate by as little as 0.125% can save you thousands of dollars in interest expense over the life of your loan so comparing mortgage quotes is certainly a smart move for borrowers.

Our personalized mortgage quote feature enables you to compare proposal from multiple lenders.  The form is free, easy-to-use, requires minimal personal information and does not impact your credit score.

Get Free Personalized Mortgage Quotes


Change Jobs

If you have submitted your loan application and you are also considering a job change, you should wait until your mortgage closes before you change careers. Changing jobs during the middle of the mortgage process can cause delays or even result in your loan being rejected. For example, if your new job has an initial probationary or trial period you may be required to with until the trial period is over before the lender approves your loan application. If the new jobs negatively impacts your earnings or changes your type of employment -- for example you become self-employed -- this can also adversely impact your loan application. In short, wait until your loan closes before you make a career move.

Review Mortgage Job History Requirement


Make a Major Purchase

It is generally a bad idea to make a significant purchase while your loan application is in process. Making a significant purchase, such as buying a new car, can affect your credit score and also deplete your financial reserves. After you have submitted your mortgage application, it is best to keep a low profile financially. The car or other big ticket item can wait until after your mortgage funds.


Apply for Other Loans or Increase Your Debt Balance

Applying for another loan, such as a personal loan, car loan or new credit card, prior to your mortgage closing is another huge mortgage don’t. Applying for loans can cause your credit score to go down which can result in you paying a higher mortgage rate, which can end up costing you a lot of money in the long run. Additionally, any new loan payments are included in the debt-to-income ratio that the lender use to determine what size mortgage you can afford. In a worst case scenario, adding new debt expense may prevent you from qualifying for the loan.

Another key point to keep in mind is that you should not increase your debt balance or monthly debt payments after you submit your loan application.  If your monthly debt expenses go up, the mortgage you can afford may go down.  For example, if your credit card balance or payments increase significantly, you may not qualify for the mortgage you want or you may need to pay down your account before your loan is approved.


Get a Mortgage You Cannot Afford

While the lender determines what size mortgage you qualify for, it is the borrower’s responsibility to make sure they can afford the monthly payment and other housing-related expenses such as property taxes and homeowners insurance. Just because a lender qualifies you for a certain loan amount does not mean that is the right mortgage for you. You should make sure that you are comfortable with the monthly payment and that the mortgage fits within your financial budget and priorities. Getting a mortgage you cannot afford is one of the biggest and most costly mortgage don’ts so make sure you select the loan amount that works best for you.

Use our Mortgage Qualification Calculator to determine what size mortgage you can afford based on your monthly gross income and debt expense


Get a Mortgage You Do Not Understand

It is very important that you understand how your mortgage works. With a fixed rate mortgage, this is relatively straightforward because you make the same monthly payment until your loan is paid off. The interest rate on a fixed rate mortgage also never changes. With other loan programs, such as an interest only mortgage or adjustable rate mortgage (ARM), your mortgage rate and monthly payment are subject to change and increase over the term of the loan. A sudden jump in your monthly payment can result in serious financial hardship.

Understand What Mortgage Program is Right for Me?

Make sure to fully understand the mechanics of the mortgage program you select. The monthly payment and interest rate you pay initially when your loan closes may end up increasing significantly over the course of your mortgage. Knowing how your loan program works from start to finish helps you avoid surprise payment spikes in the future.


Fail to Ask the Lender if Your Mortgage Terms Include Discount Points

If you find a lender that offers attractive mortgage terms, be sure to ask them if their quote assumes that you pay discount points before you move forward.  A discount point is an optional fee equal to 1% of your mortgage amount.  If a lender's quote includes discount points, that means you are paying significantly higher closing costs to obtain the lower rate, which may not be a good decision -- especially if you are going to own your home for a relatively short period of time.   

Paying discount points is a good idea for some borrowers but it is your decision and not the lender's.  Knowing if your mortgage terms include discount points before you apply for the loan helps you avoid unexpected costs and potentially find a different lender that offers a similar rate without the points, which saves you money.

Use ourDISCOUNT POINT CALCULATORto compare loans with different points and rates


Lie on Your Mortgage Application

Simply put, lying on your mortgage application is fraud which is a federal crime. Don’t lie on your application as this can result in significant penalties including fines and jail time. Some borrowers feel that they need to stretch the truth on their application to qualify for a loan but mortgage fraud ultimately costs you much more.


Kulaev, Sergei.  “Nearly half of mortgage borrowers don’t shop around when they buy a home.”  CFPB.  Consumer Financial Protection Bureau, January 13 2015.  Web.

About the author

Harry Jensen, Mortgage Expert

Harry is the co-founder of FREEandCLEAR. He is a mortgage expert with over 45 years of industry experience. Over his career, Harry has closed thousands of loans for satisfied borrowers and now offers his advice and insights on FREEandCLEAR.  Harry is a licensed mortgage professional (NMLS #236752). More about Harry

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