If you are planning on getting a home loan, you will definitely need to make a point of learning about some of the worst mistakes that people make. The more you learn about these mistakes, the easier of a time you will have avoiding them entirely. This article will provide you with all of the information you need to avoid some potentially horrible mistakes that you are bound to regret later on. In the end you will be very glad you got this information.
Putting too much money towards house-related costs
One of the worst things that you can do when it comes to having a mortgage is to put too much of your monthly income into housing-related costs. Most people who do this eventually find themselves house poor. You will find that spending less than twenty eight percent of your pre-tax income on housing costs is the first rule for determining how much you can really afford to spend. How much you make and even where you live can make a huge difference when it comes to how much of your income you can commit to housing.
Ignoring the real cost of ownership
It is important to keep in mind that you should budget one to two percent of your home’s overall purchase price to routine maintenance. The fact is that there are a lot of things in a house that can break down, and you will need to be prepared for that. The older and larger your home is, the more money you can expect to spend on repairs. Property taxes also contribute to the cost of homeownership. Take the time to learn as much as possible about the property tax system in your area so you can find out what current rates are like.
Not shopping around for the best deal on a loan
You will definitely need to make sure that you take the time to shop around for the best possible deal on a mortgage, because otherwise you will just end up spending more than you really have to. A vast majority of those who make this mistake regret it later on, so you will have to do your homework. The more time you spend looking for a great deal on a home loan, the more money you will end up saving over the years. There are many different lenders to choose from, and you will not want to select just any of them.
The APR or annual percentage rate of your loan is how much interest you are going to pay on it. It is absolutely crucial that you make a point of comparing APR rates from different lenders so you can get the very best possible deal. Those who do not take the time to do this usually end up spending a lot more than they really need to on interest over the years. In the end you will be very glad you decided to do this research.
Putting little to nothing down
If you are planning on getting a home loan, you will want to put at least something down on it. It is ideal to put down 20% of the total purchase price of your home, because otherwise you will have a significantly higher interest rate. If you want to save yourself as much money as possible on interest over the years, it is highly recommended that you keep this in mind. While it’s true that you can choose to put less than twenty percent or even nothing down on your loan, it isn’t a very good idea to say the least.
Considering all of the different mistakes that one can make when getting a home loan, it is important that you make a point of getting all the right information before going forward. Getting a home loan is a very big deal, and it’s certainly not something that you should rush into. As long as you know which mistakes to avoid, you shouldn’t have any problems whatsoever. Make sure that you also determine what you can afford before you start looking at house so you don’t end up with mortgage payments that you cannot pay.