Buying a home is an exciting milestone! It is likely to be one of the biggest purchases of your life. So before you begin the process of getting a mortgage, consider these drawbacks and how you can avoid them.
Bigger isn’t necessarily better
It may seem like a great idea to invest in a home you can “grow into” but if you get too carried away, you could become house poor. One of the best things you can do as a future home buyer is know your budget and stick to it. This way, you’ll be less likely to end up with an unmanageable monthly payment for the next 30 years. Sticking to your budget will be well worth the planning and self-discipline and help you avoid drawbacks.
Build and protect your savings
As a general rule, you should never use your entire savings to finance a down payment or cover all your home buying expenses. This will leave you no wiggle-room for surprise expenses or personal emergencies.
Many lenders are looking for applicants who have a reserve of cash in the bank, just in case problems arise. They want to know that you are in control of your finances and are ready to take on the big financial commitment of a mortgage.
So save as much as you can before you begin applying for your mortgage. Avoid large purchases that can quickly deplete your savings. And keep track of your closing costs and down payment so you know what to anticipate financially as you begin this exciting journey of home-ownership!
A mortgage is more than a monthly payment
It’s easy to think that if you can afford rent, you can afford a mortgage! But the two are vastly different. Here are some additional costs you should consider before getting a mortgage:
- Appraisal fees
- Inspection fees
- Homeowners insurance
- Down payment
- Closing costs
- Moving costs
Tip: When getting a mortgage, look out for expenses known as “junk fees,” which are actually negotiable!