According to a recent post by Mary Hunt, the “Everyday Cheapskate,” there are few mistakes prospective homebuyers can avoid, in order to protect themselves from getting in over their heads and potentially save thousands when it comes to a mortgage.
Hunt’s advice is geared toward first-time homebuyers, who could be more likely to jump in without taking everything into account. For example, if a first-time buyer does not realize the monthly mortgage payment quoted by the lender is only a portion of the actual monthly payment, they could get into tight spot. A good percentage of a house payment also includes property tax and insurance.
Hunt also warns against borrowing the full amount of the pre-approval. The amount of money you borrow should be based the amount you can actually afford to pay back each month. And while you should avoid borrowing the maximum amount, the opposite is true for the down payment–Hunt advises putting a minimum of 20% down, so that you are going into the loan with at least that amount of equity.
The final advice is to consider a 15-year fixed mortgage over a 30-year fixed. The reason for this? You pay tens of thousands less in interest over time, and will likely score a lower rate. In fact, according to a comparison by Bankrate, someone who takes out a 15-year fixed rate mortgage for $200,000 at 4% interest will pay nearly $100,000 less than someone who takes out a 30-year fixed mortgage for the same amount at 4.5% interest.
The advice Hunt gives is a great reminder that the decisions made when purchasing a home are going to affect you for years to come, so considering the big picture as much as possible can make a significant impact on your financial well-being for a couple of decades.
To talk to an expert and get all the facts, visit goldenstatemortgage.com today!