Bill Huemmer is a veteran mortgage loan officer with decades of experience guiding borrowers through the home loan process in Wisconsin. Based in the Madison area, Bill Huemmer has worked closely with homebuyers, builders, and real estate professionals since beginning his career in the mid-1980s. His background includes long tenures with Anchor Bank and Old National Bank, where he supports clients from initial interviews through final loan approval. Drawing on extensive production experience and years of training new mortgage officers, he regularly helps borrowers understand lending requirements, budgeting realities, and approval risks. This perspective is especially relevant when addressing common mortgage mistakes that can delay closings or increase long-term costs. Through clear communication and detailed explanations of loan programs, underwriting standards, and borrower responsibilities, he provides practical insight into how buyers can make informed decisions and avoid preventable financial setbacks.
Common Mortgage Mistakes that Borrowers Should Avoid
Mortgages refer to loans secured by property that empower home acquisition or refinancing. While these loans assist in this way, many borrowers enter the process without fully understanding how lending works. This lack of information can lead to costly mistakes that affect the asset’s affordability and the borrower’s financial stability and long-term wealth.
One such mistake is not getting pre-approved for a mortgage. Preapproval helps borrowers understand how much they can afford, what loan terms they qualify for, and how competitive their offer will be. From a seller’s perspective, an offer without preapproval appears weak and uncertain. In competitive housing markets, sellers often prioritize buyers with lender preapproval or prequalification. It means those without preapprovals often lose desirable properties even if they match the seller’s asking price.
Failing to understand mortgage terms and conditions is another common mistake in mortgage lending. Some borrowers overlook a loan’s interest rates, loan tenure, repayment schedules, and penalties, only focusing on the monthly payment amount. These small details can significantly affect a mortgage’s total cost and the borrower’s ability to repay the loan in full.
To mitigate this, buyers should take time to read and understand all loan documents before signing. Lenders can help explain unfamiliar terms and concepts, but it is advisable to work with an independent mortgage advisor for unbiased advice.
Additionally, some borrowers ignore their credit scores and histories and the impact these metrics have on mortgages. Late payments, high debt levels, and errors in credit reports negatively affect mortgage approval and can lead to higher interest rates and strict terms by lenders.
To avoid this, borrowers should review their credit reports well before applying for mortgages and address any inaccuracies. Clearing existing debts, avoiding new credit inquiries, and maintaining consistent payment histories can significantly improve one’s credit scores and motivate lenders to offer favorable terms and interest rates.
Other borrowers fail to put down a significant down payment on their mortgages. Experts advise buyers to put down at least 20 percent of a property’s value as a down payment, as this provides significant equity in the asset. This approach also reduces the amount of money they owe lenders, motivating them to complete their mortgage payments.
If a buyer cannot afford the recommended 20 percent equity, they should leverage private mortgage insurance (PMI). The tool charges up to two percent of the total loan amount, which borrowers pay with their monthly mortgage payment. Once a borrower accrues the 20 percent equity in their home, the bank can remove the PMI. It is advisable to consult a professional to understand how the PMI adjusts one’s monthly mortgage payments and any other relevant information.
Besides, some buyers choose the first lender they find in the market, thinking other creditors offer similar terms. Mortgage products vary widely between banks, credit unions, and other financial institutions, and settling for the first creditor can lead to higher interest rates, unnecessary fees, and unfavorable terms. To avoid this, borrowers should compare offers from multiple lenders before committing.
Overlooking closing costs and other fees is also a common mistake in the mortgage application process. These expenses may include legal fees, appraisal fees, insurance, taxes, and administrative charges, totaling a significant amount. Borrowers should request a detailed breakdown of all costs early in the lending process to avoid this mistake. It helps budget for these expenses and, where possible, negotiate certain fees to mitigate last-minute financial strain.
Lastly, some borrowers make major financial changes during the mortgage application process. Taking on a new debt, making large purchases, and changing jobs can jeopardize loan approval. Borrowers should withhold these financial changes until they finalize the mortgage to enjoy a smooth approval process.
About Bill Huemmer
Bill Huemmer is a mortgage loan officer with more than four decades of experience in residential lending. He began his career with Anchor Bank and later joined Old National Bank in Madison, Wisconsin. Throughout his career, he has worked directly with clients, realtors, and builders while also training new mortgage officers. An accounting graduate of Madison Area Technical College, he has earned top producer recognition for loan volume and number of loans statewide on numerous occasions.
