Home Buyers: Don’t Believe all Mortgage Advice
June 1st, 2016
June 1st, 2016
If you’re buying a home, many well-meaning people are all too eager to give you advice. But not all advice is good advice. So you need to know what to believe or ignore. Here is a list from Realtor.com of some of the worst mortgage advice people have dished out and why you shouldn’t trust it.
1. “Don’t bother getting pre-approved for a mortgage.”
People may think because you’ve just started shopping for a home, it’s not time to look into a mortgage yet. While a pre-approval isn’t an ironclad contract that’s been reviewed by an underwriter, it can help you avoid major problems later. A pre-approval helps the buyer know how much home they can afford to buy and what their potential payments and costs will be. That way you don’t fall in love with a home you can’t afford. Also, it shows real estate agents and sellers that you’re a serious buyer. This may give you an edge if the property has multiple buyers bidding on it.
2. “Get your mortgage from the bank where you already have an account.”
Sure, it’ll be more convenient to work with your local bank. But your bank may not give you the best rate. Since you’re shopping for the perfect home, take the time to shop for the perfect loan, too. Then, go with the loan that has the most favorable terms.
3. “Don’t bother reading the fine print.”
Many people think since a mortgage agreement is a standard contract, why should they bother reading it? Just sign it and get the process over with. The problem is, the fine print may include some clauses that could cost you a lot of money. Therefore, go through the contract with a fine-tooth comb. If you have questions or find items you want to dispute, talk to your lender about them. It could save you cash.
4. “Always go with the lowest interest rate.”
It’s tempting to choose the lowest interest rate to reduce your monthly mortgage payments. But buyer beware – especially if that interest rate is attached to an adjustable-rate mortgage. You could be in for a significant shock later on down the road when your monthly payment goes up due to a rate increase and amortization.
5. “Borrow as much as you’re approved for, even if you don’t need it.”
A bigger, more expensive house sounds great, but what happens when life throws you’re a financial curveball? How are you going to afford your monthly mortgage payments if you lose your job or require expensive medical procedures? It makes better sense to prepare a budget, decide how much you’re comfortable paying each month on your mortgage and sticking to it.
If you’re looking to buy a home and want to get pre-approved and/or have questions about the mortgage process, contact the mortgage loan experts at Grandview Lending in Indianapolis at 317.255.0062. As a mortgage broker firm, we’re not tied to any one lender. We work with a variety of lenders. That way we can shop around to help you find the best mortgage loan solution based on your needs. And we’ll provide you with the right advice.
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