5 Big Mortgage Blunders

Before you home-shop, avoid these newbie mortgage mistakes.

Before hitting another open house, get your mortgage needs squared away. Here are some monster missteps to avoid:

Mistake #1: Having big eyes

Everyone wants to move into a dream home, but you've gotta create a budget and understand how much house you can afford before getting caught up in a fancy model home. Also consider closing costs, taxes, and other home maintenance fees. With banks being more strict about qualifying buyers, it's a lot more difficult over-borrow, but still be wary of getting in over your head.

Mistake #2: Neglecting your credit history

Even if you're Mr. and Mrs. Perfect Credit Score, make sure there are no new mistakes. Bad credit can affect the amount of your loan as well as whether you'll get your loan on time or at all. You only have a certain time frame to close a loan, and you might miss the lock while trying to clear up an error. And avoid closing credit cards while house hunting because it lowers your credit score.

Mistake #3: Missing out on great programs

If you're a first time buyer, there are all sorts of loans designed to meet your needs. Some are state-funded housing programs and FHA loans .

Mistake #4: Not getting preapproved

Being preapproved allows you to make an offer with an edge, because with all the loose ends tied up you can close the deal quickly. Terms vary, but you usually have from 90 to 120 days in which a mortgage is guaranteed. That's a lot of time to look for a house -- without stressing that you aren't presenting the best offer in town.

Mistake #5: Going with the first broker

They might end up being the best and most competitive loan officer you meet, but you need to shop around. Aside from quoting loan rates, you should be offered a good faith estimate of your costs, including the down payment and closing costs, which vary by area, loan officer, and home price. Then there are fees, some of which are negotiable. See if you can get a zero origination fee, which might up your interest rate but result in less money to pay up front when closing. Read some more tips about picking a real estate agent .

Nestpert Jim Pair, vice president of the National Association of Mortgage Brokers