Although you definitely want to purchase a home that has everything that you’ve been dreaming of, it’s immensely imperative that you keep your costs as realistic as possible. Because if you make reckless decisions or rush the home buying process, you could and would most likely end up spending more money than you could afford.
Here are three money mistakes that you must avoid making:
1. Overreaching Your Budget
Take note that mortgage lenders determine affordability according to the information they find in your credit report as well as tax documents. Sometimes, however, lenders approve borrowers for mortgages that are way beyond their budget. But, instead of seeing this as an opportunity to get a higher loan — stop — and just stick with your original budget. While indulging on a home offers instant gratification and enjoyment, this excitement could be replaced with guilt and worry once you receive the bills you need to pay off.
2. Going for the Wrong Type of Mortgage
Before anything else, discuss different mortgage options with a mortgage officer or broker, suggests a mortgage lender in Fort Myers. There are plenty of loan types for virtually every borrower and every situation; you just have to pick one that’s right for your financial circumstances. For instance, some borrowers go for an ARM or adjustable rate mortgage to get a lower rate at first, but fail to recognize that their rate, and consequently, their monthly payment could increase later on. Additionally, some borrowers choose a shorter loan term to repay their debt faster, but forget to factor in potential income changes in the future.
3. Taking the First Mortgage Offer
You could save a significant sum of money by simply discussing different mortgage offers with different lenders to see which quote is the most appropriate for you; three to four lenders will suffice. Consider the offered interest rate, down payment, private mortgage insurance, and closing costs.
Keep these potential money mistakes in mind to avoid messing up your very first home purchase. Otherwise, you might actually be the one to prevent that ‘sold’ sign from being hung in your dream home.