Obtaining a home loan is one of the biggest financial decisions that most of us make in our lifetime. The amount that is borrowed is big and the loan term for which the amount is borrowed may also go up to anywhere between 20 to 30 years. Making any mistake at the time of borrowing a home loan in Texas may lead to increased financial obligations. It is, therefore, important to make a smart choice and avoid the common mortgage mistakes that most first time home buyers in Texas make. To help, we list four home loan mistakes you must avoid.
1. Not Comparing Different Home Loan Options
You may find this surprising, but most first time home buyers in Texas do not shop for the best home loan in Texas. One of the reasons they cite for not researching about different home loans is their lack of knowledge when it comes to weighing the pros and cons of different home loans. Well, if such is the case, it is advisable to hire the services of a home loan consultant who can help compare between the different home loan options to let you choose the one that suits your requirement the best.
2. Ignoring the Fine Print
Do not make the mistake of ignoring to go through the terms and conditions of the home loan agreement. This will help you avoid any issues later that may arise because of any hidden charges, prepayment penalties or late payment fees that the lender did not, or forgot to, inform you about. Read the entire document thoroughly and ask questions if you have any doubts. Asking a friend, family member or home loan consultant to have a second look is also a great option.
3. Over Committing
Many first time home buyers in Texas make the mistake of applying for an amount more than what they can afford, or not taking into account a financial contingency. While any lender will study your spending pattern to determine your borrowing capacity, but you still need to account for the savings you should make to cope with untoward incidents such as loss of income, family emergency and others.
4. Not Applying for a Fixed Loan
Many borrowers make the mistake of foregoing a fixed loan and applying for a loan with adjustable loan rates. While applying for an adjustable home loan is a great idea when the rates are near their all time high and the probability of them going southwards is much more than these rates going up, it is not a good idea to apply for an adjustable rate mortgage when the rates are already low. That’s because, in such a scenario the chances of rates going up from their all-time lows are much more than them going down, further.
Obtaining a home loan is a big financial decision, and therefore, you cannot afford to make any mistake. One of the ways to avoid a mortgage mistake is to talk to the lender and take their help to clarify your doubts. An even better idea is to hire a home loan consultant who can walk you through the process of choosing and applying for a home loan that best suits your requirement.