Most advice columns tell you how you should do certain things. But there are certain costly missteps to watch out for also. Here are six frequent mistakes that homebuyers routinely make and now, after reading this, you shouldn't.

1. Don't Choose the Wrong Mortgage: There are a number of questions you should be asking yourself before you commit to a certain mortgage. How long do you think you will own this property? What direction are interest rates going in, and how quickly? How much money do you have to work with for a down payment and closing costs? Is there a relative that can co-sign or gift you money? Is your income expected to change up or down in the near term, impacting how much money you can afford to pay to your mortgage? Don't forget that with homeownership you'll be entitled to more tax deductions and thus a probable increase in take-home pay. Take this into consideration when you're figuring how much of a monthly payment you can afford. The answers to these and other questions will help you determine the most appropriate 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 stuck with the wrong one for even a short period of time. Know your options. We can help you find out what works best for you. Call us.

2. Don't Confuse "Pre-Approved" and "Pre-Qualified": "Pre-qualified" is when the mortgage broker is making an educated guess about how much you can borrow based on information you've provided. It doesn't mean much and it doesn't carry a lot of weight. However, when you are "pre-approved" the mortgage broker has verified everything you have told them and sent your loan application on to a lender, or lenders, for loan approval. The lender then decides whether to lend you money up to a given amount at current interest rates and under certain conditions. It's when those conditions have been met that a lender will "commit" to giving you a loan. Always get pre-approved before looking for a home. The pre-approval notification does carry a lot of weight because it proves to the seller and their agent that you have your financing already in place, saving them time and allowing for a quick closing. This may sway the seller to accept your offer instead of a competing offer from someone who doesn't have their financing in place.

3. Don't Have Too Much Credit: Excessive credit can raise an eyebrow just as no credit, or even challenged credit can. Even if you pay your bills on time, lenders tend to focus on how much credit you have available to you just as they do on timeliness. So being up to your ears in car loans and credit cards is a sure way not to receive the lowest interest rate and loan costs. Postpone any big ticket purchases until after you buy your home, and close unused credit accounts. And department store credit cards, did you know that just having an open account lowers your credit score? It's true. Close 'um! Good credit is important. Call us to go over your unique situation and be sure to visit "Your Credit."

5. Don't Misunderstand How a Real Estate Agent Really Works: Be loyal. Agents admit they work harder for loyal buyers and we can't blame them. Don't work with multiple agents at the same time. You just won't receive the best service. If you decide to switch agents or if you're house-hunting with two agents in two distinct areas, disclose the situation to both agents. If you visit an Open House, sign the guest book and write in your agent's name and telephone number. (If they lower the price they'll have a way to notify you.) If you spot a new "For Sale" sign or a new listing on a Web site, ask your agent to get the details. Mention your agents name if you go and check it out yourself. Also, agents work harder for imaginative buyers who can see beyond dead landscaping and hideous wallpaper. The perfect home for you could be hiding behind a décor you can't stand. Think about what it would take to up-grade, remodel, or redecorate an unappealing home that's in the right neighborhood, at the right price. And don't forget to look at condos and townhomes if you're a first-time homebuyer. Many first-time buyers started there and let increasing home values lead them to a "move-up" home.

6. Don't Play Around With Your Offer Price: We see too many home buyers that try to get a "good deal" by testing what a seller may accept only to end up with "no deal" at all. We know you want to save money, nothing wrong with that, but if you really want a particular property then you have to offer the best price you can from the get-go, especially in a "hot" market. It is much better to start serious negotiations with the seller one-on-one than to have your offer melt into a bidding war with others.

So you thought that the term "four Cs" was only used to purchase diamond jewelry? Nope. Welcome to the world of home loans. Lenders use the four Cs to analyze your credit risk and determine whether or not to approve the home loan you request. Here's what we mean by the four Cs.

Capacity -- Your capacity is your ability to repay the debt. Lenders ask for employment information like how long you've had your current job, have you changed careers, and how much do you earn.

Credit History -- Your credit score reflects your likeliness to repay your debt. Lenders look for how much you owe, how often you borrow, whether you live within your means, and of course whether you pay your bills on time.

Capital -- Your capital is how much money is being used for a down payment and will you have money left over ? Do you need gift money? Will this transaction take every last dime that you have or will you have a financial cushion left after your home purchase.

Collateral -- Your collateral is what? The home you want to purchase. The lender wants to be sure that they will be fully protected if you fail to repay the loan. The property value and condition must be sufficient to back up your loan.

These are the four Cs. Just remember, you can be weak in one area but compensate for it in other areas. This is called compensating factors. Questions? Call or e-mail us. We're here to help.

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