The Six Largest Mistakes With Mortgages
Home loans are the largest debts and monthly expenses most of us will have in our lifetimes, so we need to avoid the largest mistakes with our mortgages to save money, time, and much aggravation.
(1). Not Comparison Shopping – Like any other kind of shopping, you need to find several and compare. This is the only way to ensure you get the best mortgage rate for your needs. You want reasonable fees and a low mortgage rate.
(2). Applying For Your Loan & Not Checking Your Credit Report For Errors – For every four credit reports three of them have errors on them. These errors can really make it hard to get qualified for your loan and to get the best interest rate. You can legally obtain a free credit report that will come from all three of the major credit report bureaus.
(3). Not Getting Pre-Approved For Your Loan – One of the first steps you want to take is to have your lender go over your credit history, debts, savings, and income to see what amount you can qualify for. If you are unable to get pre-approved, or at least not for the amount you want, then consider that a huge red flag.
(4). Acquiring Debts You Really Can’t Afford – Go over all your current bills and be honest with yourself. See how much you can spend ‘comfortably’. Include a tax estimate, any association fees or insurance, and calculate how much you’d be able to realistically borrow at the going interest rates. Then add in the amount of your down payment and run those numbers into a good home mortgage calculator. Then you can see what you can truly afford.
(5). No Rainy Day Fund – Moving is quite expensive and you need plenty of money to make all the necessary purchases. These could be curtains, ladders, lawn mowers, etc. Home repair can be costly as well. You want to be able to cover no less than the first six months of living expenses. This way you have less of a chance to default on your mortgage should unexpected things like sickness or getting laid off should arise.
(6). Simply Ignoring Any State Programs Designed For First Time Buyers – Nearly every state has some kind of assistance program designed for first time buyers. They have low cost mortgages and down payment assistance and even tax credits. These kinds of programs can lower your monthly payments which provides you with more cash at closing and gives you a better chance at sealing the deal.