This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Don't Celebrate Mortgage When You Don't Know What You're Doing

NEW YORK (TheStreet) -- You can't blame a first-time homebuyer for being giddy about landing that mortgage turning them from a renter to an owner.

But once the excitement subsides and the champagne wears off, new mortgage holders are left with the realities of the process, which can be overwhelming. It gets even worse for mortgage applicants before a loan is approved, many of whom are unprepared to strike the best deal possible -- if they can get one at all.

A study from Discover Home Loans shows that while 87% of mortgage applicants believe they will ultimately get a home loan, 63% say they are overwhelmed by the amount of mortgage information available.

Also see: Mortgage Rates Could Ruin Summer Home-Sales Hopes

Some additional takeaways from the study show Americans can get in over their heads quickly during the mortgage process. While the vast majority of mortgage shoppers believe they have a good grasp on the type of home they can afford:

  • 41% haven't even calculated a down payment.
  • 48% say they "don't know how much their mortgage payment would be if they chose a more or less expensive property."
  • The younger you are, the mortgage confused you are, as 76% of mortgage applicants under 30 say they are "overwhelmed."
  • 76% of first-time buyers reported feeling overwhelmed, but only 54% of those who have previously owned.

The rule is to know what you can afford before you apply for a mortgage, and know what lenders want before applying. 

Also see: Despite Bad News on Housing Market, Outlook is Positive for 2014

"The industry is becoming more transparent in an effort to help homebuyers become informed about changes that may affect their process," says Cameron Findlay, chief economist at Discover Home Loans. "The sheer amount of information can lead to confusion and stress. Those looking to purchase should work closely with their lender and Realtor to make sure they are comfortable with mortgage terms and understand the impact a loan will have on their finances."

Discover advises also talking to family and friends who have gone through the process. Do that before sitting down with a mortgage banker, but even then be prepared to ask about affordability issues and cover items such as interest rates, fees and closing costs.

It's also a good idea to talk to a financial adviser, who can help lay out a budget for your new home and balance it with needs such as college savings, student loan payments, child care costs and retirement savings.

Getting that first mortgage is indeed a rite of passage, and a great reason to pop some corks and celebrate with friends and family. But make sure it's the right mortgage.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,031.14 +43.63 0.26%
S&P 500 1,984.13 -1.41 -0.07%
NASDAQ 4,518.9020 -48.6960 -1.07%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs