Mortgage regulations change every now and then, and now you have more options than ever, meaning you have more opportunities to take, and more to plan for.
Industry research has shown 6 common mistakes that homebuyers tend to make when they look into shopping around for their mortgage. If you play it smart, you can save thousands of dollars, and walk away with a mortgage that will cost you much less, over a much shorter period of time. It’s insane not to take advantage of this kind of thing, since we are confident you have better things to waste your money on.
Let’s look over those aforementioned 6 common mortgage mistakes and make sure you’re spending your hard earned money in the most efficient way possible.
1. Make Sure You Get Pre-Approved
This is something we try to talk about quite a bit in a few of our other articles, because it really makes no sense to not get pre-approved. It doesn’t cost you anything, and can give you a world of freedom when you’re shopping for a home later down the road. Once you secure that written pre-approval, it tells any sellers that you have the financial backing no matter what circumstances may occur, and that you’re good for the agreed amount.
2. Settle On A Secure And Manageable Monthly Payment
When you contact your lending institution for a pre-approval, always check what level you can qualify for, and more importantly, settle on a monthly amount you feel confident you can pay. Obviously the amount you can secure matters, but things add up quickly when you buy a new house, and unexpected events can always take place, so it’s good to settle on monthly payment amount you can manage in the near future. Your best bet is to plan for the future instead of the moment.
3. Line Your Future Situation And Goals Up With Your Mortgage
How long will you live here? Where are your interest rates headed ( if you have an adjustable mortgage), and at what pace? Are there going to be any drastic impacts or changes to your income in the near future? These are all things you need to be thinking about, and they’re what can make all the difference in the world for planning what mortgage type you need.
4. Learn How To Optimize Your Prepayment And Payment Frequency Options
It’s really unfortunate that more people don’t know about this, but choosing the most frequent payment plan available can make a huge dent to your mortgage plan. Interest ends up being one of the most painful hits to your wallet, so strategically structuring your payment plan is essential for savings, as you can minimize this with more ease than you’d think.
This is why we typically advise people to look into prepayment. We know giving more money upfront doesn’t particularly sound like an attractive offer, but think of it this way, the easier you make it for the lenders, the easier they will make it on you later.
If you take full advantage of this, you can actually stop paying your mortgage years earlier than you’re supposed to. Paying a little more each time is worth relieving yourself of this stress and breaking free from your loans.
5. Check Whether Your Mortgage is Portable And/Or Assumable
It’s really unfortunate that more people don’t know about, or ask for portable mortgages. Basically, utilizing these mean that you can hop from house to house with the same mortgage plan, and it can follow you without the usual discharge penalties.
Whereas an assumable mortgage can be passed off to the buyer who takes over your home when you move. This is another great way to dodge those discharge penalties and create a more desirable offer upfront. The less you have to involve your lending institution in the housing dealings, the better.
6. Plan/Expect To Deal With A Mortgage Expert If You Want Cost Efficiency
Some professionals realize how inconvenient these dealings can be, and bravely decide to take on mortgages as their specialty. Seek these experts out, and let them find you the best offers and speed up the overall process, freeing up your time to handle other matters.
There are a wide variety of mortgage types to choose from with various payment and interest options finding the right mortgage that fits your needs can be difficult without the assistance of a mortgage professional. Be sure to find out all the terms and fee’s associated with the mortgage you choose.