Some mistakes are a necessary part of our learning process; others can be avoided. If you’re thinking about homeownership, here are five common mortgage mistakes and how you can keep from making them.
We all make mistakes, but some mistakes are costlier than others. When it comes to choosing the right mortgage, a mistake can cost you for the entire length of the loan. But the good news is that mistakes can be avoided if you arm yourself with the right information at the beginning of the homebuying process. Here are some common mortgage mistakes first-time homebuyers make and how you can avoid falling into these traps.
Taking out too large of a loan. Here’s a secret for you. A bank will lend you the maximum amount that you qualify for. Think about it: their goal is to make a profit. However, getting a mortgage loan for the maximum amount that you qualify for might not be the best option for you. If your mortgage is extremely high, you may struggle to pay other bills such as your car note or day care expenses. Not only that, but if you’re spending all of your money on your mortgage, you may not have money left for fun things such as vacations or other priorities. Experts suggest that you spend no more than 28 percent of your gross income on your housing expenses. A homeownership advisor can look at your daily budget and help you determine how much of a mortgage you could comfortably carry.
Not understanding what to look for in a loan. No one is an expert at everything. It’s ok if you don’t know a lot about mortgages. However, one of the biggest mistakes you can make is failing to educate yourself about them. When I don’t know much about something, I find an expert who can teach me. A homeownership development organization like HomeFree-USA gives you access to experts who know the ins and outs of mortgages and can help you understand what to look for and determine whether you’ve been offered a good deal.
Failing to shop around. As a consumer, you have the power of choice. Lenders compete for your business, so you want to make sure you get the best deal. Rather than taking the first offer that comes your way, shop around with different lenders to make sure the mortgage you end up with is the right one for you.
Thinking the mortgage payment is all you have to worry about. When it comes to homeownership, the mortgage is just one of the costs. You still have to pay property taxes and buy insurance. Then you may have to spend money on repairs and maintenance. In fact, one study found that the average homeowner spent $2,000 a year in maintenance costs. When taking out a mortgage loan, consider whether you’ll be able to make your monthly payment and take care of repairs and maintenance fees.
Reverting back to bad habits after getting the mortgage. Some people get their finances in order because they want to buy a house. Then, once they accomplish their goal, they revert back to their old ways. This behavior can come back to haunt you. If your finances are a mess, you’re more likely to run into problems at some point and you may even find yourself at risk of foreclosure.
Smart people learn from their mistakes. Smarter people learn from the mistakes and advice of others. Contact HomeFree-USA today to find out how to be approved for a mortgage that works for you and your family.