Buying your first home is stressful and there are things to pay attention to. Here are a few of the classic pitfalls that first time homebuyers should avoid falling into.
Avoid Going It Alone
A first time homebuyer will often need help getting through the mortgage process. A mortgage broker can be a real asset when it comes to walking you through the loan process. Mortgage brokers can help deal with questions like “how much can I borrow” and “what interest rate can I expect”? The sellers of a home have someone working on their behalf and so does the lender. You need someone that is willing to work on your behalf too. Mortgage brokers will go the extra mile to help you negotiate the best loan for you and will keep you from getting ripped off at the same time. It is worth hiring a professional when dealing with a loan that could easily last about 30 years.
Watch Out For Hidden Fees
Loan companies capture the interest of many home shoppers by offering them loans with a bunch of fees that are attached to a really low interest rate. Borrowers are so busy paying attention to the annual percentage rate that they fail to notice the thousands of dollars that they will wind up paying in miscellaneous fees. Some mortgage loans are loaded with application fees, processing fees, appraisal fees, and origination fees. These fees can increase your borrowing costs substantially and make a reasonable loan look pretty unreasonable overall. Use a loan calculator to help you assess the real cost of your mortgage loan. Also remember to read all of the fine print.
Understanding the Differences in Loan Products
You need to be sure that you understand the exact type of mortgage that you are signing up for and how that will affect your wallet. A fixed rate mortgage may work best for those that are trying to lock in a consistent monthly payment amount while an offset account may be a better idea for those that are looking to lower their borrowing costs over time. Offset mortgages are flexible and allow borrowers to lower the interest charges by offsetting it against the available credit balance. Flexible mortgages like these can benefit financially responsible individuals but pose a hazard for anyone who needs stable payments. Again, read the fine print and decide what is best for you.
In short, if you pay attention to all of the details along the way, you may be able to enjoy knowing that you made a great deal on the purchase of your home.