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A home mortgage is a big investment that you should take careful planning to obtain. You don’t want to mess up on your investment early to find out that you are stuck with that mistake for the life of your mortgage loan. Remember that your mortgage is likely the biggest debt that you will ever have, so financing it correctly is imperative to your lifelong financial success. 

Going House-Poor 

It’s important to understand the difference between investing in a house for a fair price and losing all your financial freedom because you are house-poor. This is one big mistake that many first-time homebuyers tend to fall victim to. 

The mortgage lender will typically approve most people for a larger mortgage than they actually need. Many fall into the trap of looking for a bigger house because the bank says they can afford it. Instead, you should look at what you truly can afford. A larger house means a larger loan, which equates to a larger monthly payment. 

Don’t make the mistake of committing too much of your monthly income to a mortgage payment. Remember that your mortgage loan can last for up to 30 years. You don’t want to be stuck with a payment that restricts your ability to save and pay for other expenses, such as vehicles, retirement, children, and others. You can learn more about picking the right mortgage price for your budget online.

Not Realizing The On-Going Expenses 

Being a home buyer requires more than just paying your monthly mortgage payment. Homeownership commits you to the on-going expenses for repairs and upgrades. You should budget about one to two percent of the price of your home as an annual expenses fund. This fund will help pay for broken water heaters, a new dishwasher, and other things. 

Property taxes are another expense you will need to plan for. You should look into what the potential property taxes will be for your neighborhood, when they will increase, and by how much each year. Homeownership is more than just buying the home, it’s an on-going arrangement. 

Not Checking Your Credit Report Before Applying 

Your credit score is one of the biggest deciding factors for the loan amount you are approved for as well as the interest rate that you will receive. Before you even think about applying for a loan, you should obtain a copy of your credit report from EquifaxExperian, and TransUnion

Read over your report to see if there are any negative factors that would decrease your risk of getting a good interest rate. In some cases, those who have little credit history are able to boost their score quickly by getting a credit card or two. There are some little changes you can make to increase your credit score. You should aim to increase your score as much as possible before applying for a mortgage loan. 

Take the time to prevent making all of these costly mistakes listed above. You want to ensure you get the best home at the lowest rate, which is only possible by avoiding the above mistakes.

 

About The Author

Hattie Williamson