Purchasing a home can be one of the most exciting and stabilizing investments of your life, but because of the expense, there are many ways you may be spending more money than you should. If you’re wondering about the financial soundness of your home investment, here are some things to consider before putting anything down.
Investing In Too Much Home
Many home buyers are so gung-ho about having their own home that they forget a mortgage takes many years to pay off and there’s a lot of living to do in the interim. While you may be looking at the monthly cost of your mortgage as something to get through, it’s more important to find a home that will provide you with a more flexible lifestyle. Instead of spending half your income on your home, it’s better to choose a more affordable option that won’t lead to buyer’s remorse.
Putting Less Than 20% Down
One of the greatest struggles for those who want to make the leap into home ownership is the down payment, and many buyers will put down a lot less than 20%. While this might seem like a better deal in the short term, putting 5 or 10% down means you’ll have to pay for mortgage insurance in case you default on your payments. It can be hard to come up with 20% for many buyers, but putting this amount down means you don’t have to pay for added insurance.
Not Researching Your Lender
When it comes to purchasing food or electronics, many people will shop around for the best deal in the hopes of saving money. However, few things will cost more than investing in a home, so you should be doing the same research when it comes to your lender. According to the Consumer Financial Protection Bureau, approximately 50% of Americans consider only one lender prior to applying for a mortgage. Instead of being among them, take the time to research a lender that will help you save on fees and interest.
It can be overwhelming to buy a home with all of the information and energy that goes into finding the right place and the right price. However, by being realistic about what you can afford and searching for the best loan for you, you’re well on your way to a sound purchase. If you’re currently on the market for a mortgage, you may want to contact a mortgage specialists for more information.