Worst Mortgage Rate Mistakes To Avoid
We are all humans, and humans are prone to error. It is best (when possible) to learn from the mistakes that others have made in the past. Avoiding repeating those errors helps us grow as people and avoid pain. One area that can be instructional to us all is learning from the mistakes others have made about their mortgage rate.
Not Taking The Fixed-Mortgage Rate Option
There is always a difference between a fixed-rate and a variable-rate mortgage. The variable-rate is always a little lower than the fixed-rate. The fixed-rate stands at a premium as a mortgage rate because of the added security that it provides to a home buyer. That buyer will know exactly how much he or she will be paying on their mortgage in advance. There is in fact a premium value to having that information.
While it may be tempting to go for the lower variable mortgage rate, this is not advisable. The Loans.com.au Mortgage Rate on a variable loan can literally change at any time, and it is almost never in your favor. The variable mortgage rate is simply too big of a gamble on something that is such a cornerstone to a person’s life.
Ignoring Small Difference In Mortgage Rates
What is the difference between paying 2.25% and 2.5% on a mortgage? A huge difference! The two difference between those two numbers is in fact small, but the different in total payments over the life of the mortgage is enormous. Keep in mind that most people borrow their mortgage over a period of decades at a time. The interest difference between those two loans will add up to a surprisingly large amount for the person who does not zero in on even a small difference like this.
Not Putting Enough Money Down
A down payment is a big sign to a lender that the person they are lending to has the ability to repay the loan. The mortgage rate offered to someone who puts money down on the loan is significantly impacted by how much money that person is willing to put down on their loan. Anyone who makes significant strides towards putting down a significant down payment can probably count on receiving a better rate than if they had not done so.
Buying More House Than One Can Afford
Everyone dreams of having the big house that will impress their friends and family. However, most of us cannot afford that dream house right off the bat. Purchasing more house than one can really afford is one of the most common mistakes people make relating to their mortgage. Avoid this by checking your ego and trying to tamp down how high you set your sights.
People sometimes get “home fever” and just want to become a homeowner. It is noble goal to have, but it is not something that a person should just rush into. There are so many ways to get oneself financial tangled up trying to do so. It is not worth the risk and the value to paying attention to details of one’s mortgage rate is essential to a happy financial life.