Four Silly Home Loan Mistakes Everyone Makes

As interest rates lower, buying a home seems more feasible and affordable now than it has in recent years. When you are shopping for a home loan, it is important to take the right measures to ensure that the loan meets your needs and your budget. Make sure to avoid these four silly home loan mistakes everyone makes.

Making a Big Deal Out of Mortgage Points
You can never tell how long you will live in your new home. One mortgage point is equivalent to 1% of your entire home loan, meaning that if your total home loan is $200,000, you may be asked to pay $2,000 for one point. What you’re paying for is to lower your interest rate. This service requires payment upfront and is great for those planning to live in a home for a long period of time. However, if you don’t see yourself living in the home for more than a decade, you should think twice about purchasing points.

Overpaying
If you purchase a home with a 30-year fixed interest rate agreement and you end up moving out of the property, you will end up overpaying. Long-term mortgages are more expensive than other options, if not the most expensive, due to the high interest rate and the amount of time you will have to pay on the loan. Level your expectations with what you need now and in the future. If you can pay off the loan in 10 years, then get a fixed mortgage rate with a low interest rate. The right home loan for you will give you the long-term results you are looking for to stay on track with your finances.

Shopping for Fees and Rates at the Same Time
You’ll need to strategize on how you are going to research different mortgage options, but never search for all the options at the same time. Factors such as your ability to pay for the mortgage, the payment terms, fees and rates, the current market situation and your specific lifestyle should be accounted for when determining the mortgage structure that will fit you best. If you choose to shop by fees, then you should be taking into consideration that you will need to pay for the mortgage in a short amount of time. If you are shopping by rates, you will want to gain flexibility in how you’ll earn savings off the interest and how you’ll pay during the duration of the loan.

Not Asking About Hidden Charges or Pricing Adjustments
Don’t be tricked by low interest rates from banks and lenders – these rates may come with mortgage points that you will have to pay for upfront. Save yourself from future debt by breaking down the cost of the loan carefully, including the mortgage points on the loan before you seal the deal with your lender or bank.

You can count on Ericson, Scalise & Mangan, PC to provide you with sound guidance and experience in these uncertain times. For assistance with your legal needs, please contact us today at (860) 229-0369, or email us at info@esmlaw.com.