6. Going for exotic home loan programs: Most of the homeowners simply don’t know what they were getting themselves into. Some of the lenders who come up with all sorts of exotic products look flashy to the borrowers as the lenders help them make their dream of home a reality. There are many products like interest only loans, which can lower your payments up to 20-30 percent. The benefit of these loans is that they allow the borrowers to live in a home for few years by paying just the interest.

All of these products are considered as negative pay back products. In such cases the borrowers are actually building up negative equity. The truth is that the borrowers are paying more amount than actually they owe.

7. Choosing lenders who give lower interest rates: It’s a human tendency that we go for things that are cheap. Sounds good, but not in case of home loans. It is not a good idea to chase a lender who provides you with lower interest rates. Getting a good deal does not necessarily means getting a best interest rate.  The interest rate on your loan is calculated by a variety of factors, but is categorized by the closing costs that you pay along with receiving the loan.

Origination point and discount points are the two types of point that are charged on a loan. A point is equal to 1 percent of your loan amount. A discount point is a charge that you pay to the lender to lower your interest rate and the origination point is a fee for service.  Even if you choose a lender with lower interest rates ensure that he discloses all the discount points.

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