A home is not something you buy every day, and it is one of the most expensive purchases you will ever make. That is why you should play it smart when purchasing your home. Before diving into the world of housing financing, you ought to do some research so that you do not fall for these house loan mistakes.
1. Assuming your credit score
An excellent credit rating ensures that you qualify for attractive rates. It proves to the lender that you can afford to repay your Salt Lake City home’s mortgage. Having poor credit might not only cause your loan to be denied, but it might also mean paying high interest rates. When you want to get a house loan, start working on your credit rating to ensure that it is in good standing by the time you start shopping for the loan.
2. Making yourself house-poor
If you commit a large part of your monthly income to house-related expenses, you might be left with too little or no money for other expenses. Make sure that your mortgage payments are less than 28% of your pretax earnings. Spending more than you can afford is be the biggest mistake a homeowner can make.
3. Being unrealistic about your financial capacity
It’s easy to pay more attention to the interest rate instead of the loan type. A 15-year fixed mortgage can have a lower interest rate than a 30-year fixed mortgage, but can you afford the premiums for the 15-year loan? The same applies to a short-term adjustable loan. Although the interest is initially low, the rates might fluctuate significantly. Never go for an option that will over strain your finances.
Purchasing a house for the first time can be daunting, especially when it involves you getting a house loan. Make sure you avoid these mistakes and find help if you are stuck.