Real Estate

5 Terrible Pieces of Mortgage Advice a Real Estate Agent Has Actually Heard

published Feb 26, 2020
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When it comes to buying a house—and securing a mortgage—everyone has an opinion on how to do it best. As a wannabe first-time homebuyer, it’s already a confusing and overwhelming process. Once you add in conflicting takes on mortgage strategies, it’s downright confounding.

We spoke with an experienced real estate agent for her insight into what popular opinions not to heed when it comes to mortgages. Here are the worst pieces of mortgage advice Noemi Bitterman of Warburg Realty in New York City has ever heard.

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Always get a 30-year fixed mortgage

“This is really bad advice that could cost the mortgage holder a lot of money,” she says.

Everybody’s financial situation is different, and sometimes getting a 5-to-7-year adjustable-rate mortgage or a 15-year mortgage is the way to go. These options offer lower rates, which can translate into substantial yearly savings, Bitterman explains.

Go through your neighborhood bank

“As a real estate professional, I disagree that potential buyers should only seek out mortgage advice at their local bank,” she says.

Her advice? Find a mortgage broker—preferably one whom a family member or a friend has used and recommends—because they’ll have access to many banks and lending programs.

“Again, everybody’s situation is different, and most neighborhood banks don’t offer the entire range of mortgage programs available,” she explains.

Never pay for points on your mortgage

A buyer may pay for points on a mortgage, which are fees paid directly to a lender at closing, to secure a reduced interest rate. Those who say this is bad practice are wrong, according to Bitterman.

“Sometimes, paying one to two points on your mortgage will get you a really low rate. So, although you have to pay upfront for your low rate, it will save you a bundle in the long term,” she says.

You don’t need to get pre-qualified for a mortgage

Anyone thinking of buying a home must get pre-qualified for a mortgage. Period.

“The only way you will know how much you can actually afford to spend on a home is by getting pre-qualified by a mortgage professional,” she says. “Many people think they know what they can afford. Then, when they apply for a mortgage, the numbers don’t work out as they thought.”

Apply for a mortgage lender online

Everyone loves online shopping. While online lending alternatives may be attractive, it’s not wise to go this route for a mortgage, Bitterman said. 

“A mortgage needs to be structured by a professional. A mortgage professional will guide you and compile your application in the right way,” she says. “There are too many details that can be overlooked.”