Last Updated on
Each year, over 5.5 million existing homes are sold in the United States alone.
Over time, you will probably find yourself growing tired of renting a home. While renting a home or apartment can be convenient, it prohibits you from altering your surroundings.
The first step you have to take when trying to buy a home is getting pre-approved for a mortgage. Before going out to apply, you need to do some research on things like APR vs interest rate, private mortgage insurance, and repayment terms.
Being informed about these topics can help you narrow down the home loan options you have with ease. Read below to find out more about common mortgage mistakes to avoid.
Biting Off More Than You Can Chew Financially
While having a nice home is important, you need to avoid overextending yourself financially. Committing too much of your monthly income to a house payment can lead to a lot of undue stress.
If you don’t have extra money to do things like fix your car or even save for retirement, you will quickly develop a case of home buyer’s remorse. Ideally, you will want to spend about 28 percent of your pre-tax income on a home.
Abiding by this rule can help you avoid getting in over your head and possibly neglecting other debts to pay your mortgage.
Assessing the True Cost of Ownership
If you have never owned a home before, you are in for a surprise when it comes to the ongoing costs associated with maintaining a home.
Generally, a homeowner will spend up to 2 percent of their home’s total value a year on maintenance. If you are not financially responsible, it could lead to your new home falling into a state of disrepair quickly.
Failing to Shop Around Before Selecting a Mortgage
Selecting the first home loan you come across is a bad idea. Each of the lenders in your area will be able to offer you something unique, which is why you need to meet with as many of them as you can.
Studies show that only about half of the home buyers in America take the time to research all of their options before selecting a mortgage. The last thing you want is to pay more for your loan due to a lack of research.
Scheduling a few consultations with lenders in your area can help you greatly. During these meetings, you can ask a number of questions to ensure you are getting the best possible deal.
Ignoring APR Can Be Costly
When considering which mortgage is the right fit for your needs, don’t forget to consider the APR. Some of the mortgage lenders out there make a point of advertising their low-interest rates.
In some cases, these companies will charge a higher APR, which makes the loan cost more over time. Instead of being duped with false claims, you need to read all of the particulars of a loan before signing off. With a bit of due diligence, you should have no problem figuring out which mortgage best meets your needs.
The key to finding a quality mortgage is working with a reputable and experienced lender. These lending professionals can guide you through this difficult process with ease.