Mortgage

Buying a home is one of the biggest financial investments you’ll make in your life, and it’s important to make sure that you’re doing what will be right for you down the road. If you’re trying to avoid buyer’s remorse and are wondering what major missteps to avoid when diving into the market, here are a few things you may want to watch out for.

Buying Too Much Home

It’s often the case that a homebuyer will get so excited about a home they see that they need to have it, but putting all of your money into one investment can be difficult to sustain over time. Instead of deciding to budget and buckle down on your expenditures, ensure that your monthly budget still leaves room in the event of other expenses or financial setbacks. This will ensure that your home stays as something you can enjoy that won’t become a burden.

Not Saving Up Enough

Many people want to invest in the market right away and get into a home, but it can often be worth the wait to save up so that you have at least 20% for a down payment. Putting 20% down on a house means that you won’t have to pay the added costs for Private Mortgage Insurance (PMI). Not only can this lead to smaller mortgage payments on a monthly basis, it also means that you’ll be able to pay off your mortgage loan that much more quickly.

Forgetting All The Associated Costs

It’s easy to be wooed by the cost of the monthly payment and think that it’s less expensive than you thought, but it’s important not to forget about all the other costs that go into owning a home. In addition to the closing costs of home ownership, there will also be property taxes, homeowner’s insurance and the maintenance fees required for home upkeep. If the monthly mortgage payment is already pushing it, costs like these can make your overall mortgage costs unmanageable.

There are many mistakes that can be made when it comes to purchasing a home, but by being aware of all of the costs of home ownership and taking the time to save up, you’ll be well on your way to owning a home that’s affordable and sustainable. If you’re getting prepared to delve into the real estate market, contact your trusted mortgage professionals for more information.

From putting your home on the market to finding the lender with the best rates, there are so many things involved in buying a home that the terminology is just one more thing to add to the list. While there may be quite a few words you’ll hear that may be unclear, here are a few you’ll want to watch out for so you’ll be prepared for home ownership.

Adjustable-Rate Mortgage

Often known as ARM, an adjustable-rate mortgage corresponds to the conditions of the market. This means that your interest rate will shift from day to day along with the market, and the amount of your monthly mortgage payment will fluctuate along with it.

Fixed-Rate Mortgage

Unlike an ARM mortgage, a fixed-rate mortgage will offer a predictable monthly interest rate that you can rely on. While this can be comforting for many homeowners who are market-weary, it can also end up costing more than an adjustable-rate mortgage by the end of the loan term.

Down Payment

Down payment is one of the most familiar mortgage terms out there, and refers to the amount of money you put down on your home to secure it. While putting 20% down will enable you to avoid having to pay private mortgage insurance, the amount that is required varies from lender to lender.

Private Mortgage Insurance

Often known as PMI, this type of insurance can often be confused with homeowner’s insurance, which protects your home in the event of fires, floods and other damage. PMI, however, is the type of insurance that is required for those who do not put 20% down and is there to protect the lender in case of loan default. For homebuyers who can put down 20% or more, PMI will not be an issue.

The Principal

With the costs involved in interest, insurance and the down payment, it can be confusing to keep all the mortgage fees straight. However, the principal is different from all of these things and is the total loan that you borrow to make your home purchase. When you hear the phrase “paying down the principal”, it refers to the total amount of your loan, without any interest.

There are many terms that may not be familiar to the layman, but there are a few that will be important to know when you’re hitting the real estate market. If you’re currently getting ready to purchase a home, contact one of our mortgage professionals for more information.