Tag Archives: Mortgage

Ways to Evade Mortgage Application Pitfalls

Mortgage ApplicationOwning a house is a landmark investment that transforms personal budgets by saving huge chunk spent on rentals. For some people, a mortgage is the biggest loan they ever apply for; this takes more than a decade to service the full amount. For this reason, you need to take the necessary caution to avoid falling into costly mistakes.

CityCreekMortgage.com explains some of the pitfalls you should watch out for:

Committing a large portion of your monthly income to service the loan

While you could be looking for a luxurious home in the suburbs, you need to know the exact amount you can afford for your loan. Committing a large portion is likely to leave you little or no money to save for your retirement, college fees or other financial obligations. As a ground rule, keep the housing expenses below 28% of your gross income. It helps you determine the kind of house you can afford for your financial ability.

Settling for the first lender

When it comes to loan applications, you need to be familiar with the current market and terms of the loan. Many people might be thrilled by the huge lending institutions, paying little attention to the conditions of the mortgage. As most applicants are first-time home buyers, they are likely to fall into sales terms offered in their first encounter. They are liable to miss better payment terms and lower interest rates that come with extensive shopping.

Not locking the interest rates

The credit market is known for its volatility in the interest rates. While you are likely to benefit from the mortgage rates movements in the markets, you are likely to suffer high-interest rates. To avoid disappointments, lock the interest rates to enjoy a stable payment schedule. You may miss out on reducing rates, but most are short-lived.

Be a smart borrower; as long as you keep away from these pitfalls, you can get through your loan application.

Benefits and Drawbacks a Mortgage

Mortgage

Mortgage in St. GeorgeA home to call your own is one of the most fulfilling things a person can achieve. However, most people find it difficult to buy a house in full cash payment. This is where mortgages come to rescue. A lot of people avail this kind of loan in order to acquire house ownership. With pros come the cons of mortgage.

Benefits of a mortgage

Home ownership made affordable. Buying a house in full cash payment requires a lot of money. Plus, there are a lot more household payments and bills to pay. It makes buying a house much more difficult to achieve. When you avail of a mortgage, the amount is divided by the number of years you will pay. Payment is much more affordable when you cooperate with a mortgage company. St. George companies offer flexible rates to customers for them to achieve their dream house.

Investment Potential. Religiously paying your mortgage and eventually owing your own home is a big investment. Homes tend to increase in value as time passes. The amount you pay today may be far less than the amount in the future.

Drawbacks of a mortgage

You pay back much more than you borrowed. The longer period of time you are paying off your debt, the more interest adds to your debt. Monthly payment may not be huge, but when you multiply it by the numbers of years plus interest, the amount will be enormous.

Risk of losing collateral. The house itself is the collateral. Once you cannot pay, your house will be taken back by the lender. Surely, if you will not be able to pay your account, a good mortgage company will find ways to recover their money by selling the property. Once the house is taken from you, you lose the money you already paid up.

When deciding whether or not to apply for a mortgage, you must weigh your options carefully. Evaluate the pros and cons in order to come up with the best selection. In your decision lies your way to achieving your dream house.