According to the most recent survey conducted in states like Alabama, almost half of potential buyers don’t really know anything about a mortgage. This can surely create a lot of problems in the future and may even cost you to be financially broke. But how can you prevent that from happening. Here are some of the most common mistakes about mortgage and try to learn from each of them.
Not Understanding How Mortgage Discount Works
Most people who apply for a mortgage usually purchase discount points earlier in their loan term. This is not really advisable since you can actually earn those points through a much lower interest rate as you go on through your loan. This will result in a much higher payout in the future. You might not even have any plans to complete the loan term so you won’t be able to earn the money back that you spent on buying discount points.
Ignoring the Loan or Mortgage Rates
There are two major types of mortgage: the fixed rate and the adjustable rate mortgage. If you have a fixed rate, this means that your mortgage would stay the same until the end of your loan. However, if you have the adjustable mortgage rate, it means that your monthly house loan payment may still change. If you don’t monitor your mortgage, chances are you might get surprised of how big your monthly house payment is going to be.
Failure to Check Other Lenders
Many buyers believe that all lenders in cities like Birmingham offer the same fees for appraisals and credit report. It would actually be much cheaper if you compare other lenders’ fee and rates. This will give you the right information on who gives out the most affordable rates and fees. This will give the borrowers the upper hand when negotiating for the best possible mortgage.
Not Checking Different Loan Options
Some people completely disregard other loan options such as Adjustable- Rate Mortgages or ARMs just because they think that it’s complicated. However, ARMs actually has its own benefits. Since ARMs usually has a much smaller monthly payment at the start of the loan, this will give you enough time to adjust with paying your newly added expense. Aside from that, this is very much advisable for people who are not really going to stay in their homes for more than 10 years.
Overlooking Basic Terms
Most people don’t really know some terms regarding their mortgage. This would actually cost some major problems, especially for first- time buyers. It would be best for you to somehow read or research about the basic terminology in your contract so that you will be aware of what the things that might happen or get charged on your mortgage.<< Back to the list.
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