The idea of finally having your own home can indeed be exciting. With the help of a reliable mortgage lender in Salt Lake City, you can apply for a home loan to finance the purchase. As long as you have an overall stable financial background and status, you are likely to be approved for a mortgage loan.
However, aside from your source of income, there are still other things you have to consider before applying for a home loan and getting into a mortgage agreement. Most often than not, it’s not enough that you currently have a regular job or a stable business. When it comes to mortgage, it’s not just the present you have to think about, but the future as well.
By making smart choices and decisions, you’ll be able to get the most out of the home buying experience. You will also avoid experiencing common mortgage pitfalls. In this article, we’ll take a look at the mistakes you should avoid doing when getting a mortgage.
1. Committing most of your income to housing costs
When most of your monthly income goes to mortgage payments and other housing-related expenses, it most likely means that you have little to no money left for other things. It will usually take several years to decades to finish paying for a mortgage loan. So, a mortgage can make you house-poor for quite a while if you don’t plan carefully.
You should consider that aside from the basic and usual expenses, there are other emergencies that you should prepare for. From car repairs to health issues, a lot of things can financially drain you.
As much as possible, you shouldn’t spend more than 30% of your income on your house. So, if a mortgage you’re planning to get will have you spend more than that, you should think about it harder.
2. Not getting pre-qualified and pre-approved
If you think pre-qualification and pre-approval are just a scheme done by mortgage lenders to get your information, think again. While pre-qualification and pre-approval are two different things, they can both help you gauge if you can afford a mortgage.
Pre-qualification gives you a rough idea of how much loan you can afford, given your financial capabilities. Pre-approval, on the other hand, helps you make sure that you can afford a loan.
Mortgage lenders do pre-approval by thoroughly evaluating your financial background and status. When you get pre-approved for a mortgage, you can be sure that you can afford it without going broke sooner or later.
3. Relying solely on the amount indicated in your pre-approval report
After getting pre-approved, you will be given a report or letter that indicates how much loan you can be approved for. It will be in your best interest not to max out the amount indicated in your report.
4. Making a small down payment
A small down payment is attractive to many because it means you won’t have to shell out a lot initially. However, a small down payment also means higher monthly amortizations. Expensive amortization may make it difficult for you to secure a stable monthly budget.
The Right Professionals Can Guide You
Want to make sure you don’t make these mortgage mistakes? Work with a trusted mortgage lender in your area. They will provide you with transparent and honest assistance so you can make the right decisions.