It’s critical that you’re well-prepared before submitting an application for a mortgage loan with your bank or another lending institution. It’s unfortunate that so many consumers put their faith in their bank to make important decisions for them during the mortgage application process. This could turn out to be a costly mistake.
After you’ve borrowed money to buy a house, here’s how it’s possible that your lender may lead you astray and leave you feeling disappointed.
The decision to take out a mortgage should not be left to your bank.
During the mortgage process, many homebuyers make a significant mistake by depending on the lender to inform them how much they may borrow.
You see, when it comes to determining how much of a loan you may get, mortgage lenders look at a number of different aspects. They take into account your income, present debt, and credit score. They’ll use this information to determine how much of a loan you’ll be eligible for.
Lenders typically want to provide you with as much money as they think you’ll be able to repay them with. As a result of this, the information they used to draw conclusions is somewhat limited.
Your financial goals, such as preparing for early retirement or being able to afford to stay at home with your future children, are unknown to lenders. To avoid foreclosure, they only know how much you can pay based on your existing income, and they are aware that you will have to make major concessions in order to do so.
Because they don’t really care if they lend you so much money that you can’t accomplish anything else, they’ll still get their profit.
How can you figure out how much money you need to borrow?
Borrowing as much money as your lender will allow could leave you feeling house poor and unable to pursue other life goals since you have agreed to pay so much for a property.
This can only be avoided by making your own judgment about how much money you can afford to spend on a property, and sticking to that amount regardless of what the lender is willing to accept.
Your current and future goals, as well as your professional aspirations, should be taken into account when determining how much of a mortgage payment you can afford. Proceed from there to determine the maximum amount you can borrow while still making payments that are within your means.
As soon as you know your monthly housing expenditures, you can determine the maximum amount of money that you can borrow to maintain your payments within your pre-determined budget.
Rather than focusing solely on the bank’s bottom line, this method allows you to look at your overall financial situation when determining what kind of mortgage you can afford. A loan that is the proper size for you is considerably more likely than one that you regret.
It’s an unprecedented opportunity to save thousands of dollars on your mortgage.
Expect interest rates to rise from their current lows sooner rather than later. Since today is the deadline for both refinancing and purchasing a new home, it is imperative that you take action now.
In fact, our expert has used this company to refinance (twice!) and recommends it.