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Mortgage Mistakes That Can Cost You

If you're interested in buying a house, then you probably already know that getting a mortgage can be no picnic.

Your mortgage is almost certainly the largest debt you will ever take on, and like any major life decision, it makes sense to do plenty of preparation before you take that leap. If you do your homework — and avoid these common mortgage mistakes — you'll be well on your way to buying a house.

  1. Not Having Your Finances In Order
    Before you ever set foot in a lender's office, you need to have your financial ducks in a row. Have all your paperwork handy, obtain a credit report, and take any necessary steps to improve your credit and financial standing before you start applying for a mortgage. If you don't, you could end up getting a pretty rough deal or even being rejected altogether.

  2. Borrowing Too Much
    At the end of the day, your mortgage is a debt that you will have to eventually pay off. So why take on any more debt than you have to? Be honest with yourself about what you can afford. As a general rule, your housing costs should not exceed 30 percent of your take-home pay. Any more than that, you run the risk of making yourself "house poor," which puts you in a very precarious financial position.

  3. Looking for a House Before Getting Pre-Approved
    Looking at houses without being pre-approved for a mortgage is like going to the grocery store without knowing how much money you have in your wallet. There's a good chance you'll be in for a shock when you get to the check-out line. Getting pre-approval will give you a solid idea of how much a lender will be willing to offer. And while this number is not entirely set in stone, it's enough to let you know which houses you definitely can't afford.

  4. Not Shopping Around
    For many prospective homeowners, getting a mortgage isn't easy. So it's tempting to jump at the first offer that comes along. After all, it might be the only offer you get, right? That's not necessarily the case, and it's important to remember that just because you've been offered a mortgage — even one that seems like a good deal — doesn't mean you have to take it. Shop around. Do your homework. Talk to multiple lenders. You may be able to get a mortgage with better rates and better terms than you thought possible.

  5. Putting Too Little Down
    It goes without saying that the more you pay for your house upfront, the less you'll have to pay later, but it's far too easy to put down the smallest possible down payment without really considering the consequences. As a general rule, you should be able to put down 20 percent of a home's cost upfront. If you don't have that much on hand, it's worth taking the time to save it up. Most lenders require you to put 20 percent down to avoid mortgage insurance, an expense that only increases your monthly mortgage payment.

Getting a mortgage is a major accomplishment and an important step on the road to buying a house. By avoiding these common mortgage mistakes, you'll be well on your way to making your dream home a reality.

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Disclaimer: All information deemed reliable but not guaranteed. All properties are subject to prior sale, change or withdrawal. Neither listing broker(s) or information provider(s) shall be responsible for any typographical errors, misinformation, misprints and shall be held totally harmless. Listing(s) information is provided for consumers personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Information on this site was last updated 02/07/2023. The listing information on this page last changed on 02/07/2023. The data relating to real estate for sale on this website comes in part from the Internet Data Exchange program of Bright MLS (last updated Tue 02/07/2023 1:42:53 PM EST) or CJARMLS (last updated Fri 05/20/2022 2:39:11 PM EST). Real estate listings held by brokerage firms other than Berkshire Hathaway HomeServices Homesale Realty may be marked with the Internet Data Exchange logo and detailed information about those properties will include the name of the listing broker(s) when required by the MLS. All rights reserved. --

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