Securing a house to live better in the future is the life goal of many. And now that getting a house through a mortgage has become the norm, it’s important that those planning to take out a mortgage know what to do and not to do. And there’s no better way to learn about the latter than finding out the most common mistakes other borrowers commit. Here are some of them:
Being unaware of additional expenses
Property costs more than its price. On top of the mortgage payment, borrowers have to pay various one-time fees, many of which can be pretty pricey, and recurring costs such as taxes, utilities, and home loan interest. There’s also the possibility that the house needs repairs. Sometimes there are damages the previous owner does not know of or that happen over time.
Potential homeowners should not forget to consider these expenses, as it can be a headache to deal with them after you’ve allocated your money solely for the mortgage payment.
Relying only on one money lender
A licensed loan company offers various loan products. To get the best loan that suits their needs best, it’s recommended that borrowers shop around and compare loan products and terms from various lenders. Getting a mortgage without comparing many mortgage lenders and banks can lead to missing out on savings and better terms and rates.
Not trying to get pre-approval first
For many, a house is a long-term goal. That’s why those who can finally afford it get too excited. Nothing wrong with that, but borrowers need to calm down a bit. After all, there is no certainty that your mortgage application will be preapproved.
Never count your chickens before they hatch—going to the lender’s office first to be pre-approved before seeing the houses is the wise step. They will assess your ability to get financing and offer the amount based on your current financial situation. You can then decide which house you can afford and work for.
Spending most of the savings to cover the mortgage
It’s common knowledge that mortgage down payment may be high. In fact, most people who take out a mortgage feel that they spend the most in this part of the process. Some would even take out a portion of their savings just to pay it. However, we would not be the cause or blame for the mortgage.
However, many would argue that spending 50 percent of savings on the mortgage down payment is an unwise strategy for various reasons. First, emergencies and unexpected expenses from the house can pop up at any moment. Second, having a house needs maintenance, and things can happen to it unexpectedly.
Conclusion
When borrowing money, borrowers should have a well-organzed budget mapped out. The same is true when taking out a mortgage for a home. Borrowers need to have all the necessary knowledge so they can decide wisely and avoid all the mistakes mentioned above. So if you’re planning to take out a mortgage for a home soon, there’s no better time to get things right than now.
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