3 Tips For Purchasing Your Home
Posted on: 17 August 2016
Purchasing a home is incredibly exciting. There are many people who purchase a house and get excited about the prospect of owning a home without realizing how much money they are putting into it. Eventually, they become house poor, meaning all of their money goes into their house. Here are some things that you can do to avoid becoming house poor when purchasing a home.
1. Lower Your Interest Rate By Shopping Around
Your interest rate will play a major role in how much you pay monthly for your house and how much interest you pay over time. Even a couple points lower can save you a good deal each month, and thousands over time. This is why you should always do your research before accepting an interest rate.
For example, you might only talk to one mortgage lender about your loan, and they will give you an interest rate. If you don't shop around, you will never know if you could get a lower one. In addition, you can use a lower interest rate quote from a different lender against other lenders. Don't be afraid to ask them to lower your interest rate; you will be surprised at how much you will save over time should they accommodate you.
2. You Decide What You Can Afford, Not The Mortgage Lender
When you are calculating how much you want in a home, you should decide on your own how much you think you can afford. Look at all of your expenses and decide how much you want to put into your house each month. The concern is that when you apply for a home loan to get pre-approved, the mortgage lender could approve you for more than you expected. They might even approve you for 30-40% of your income. Just because they will let you borrow money to buy a bigger home doesn't mean you should take it. You will be the one who has to make the payments each month, and if you let the lender tell you that you can afford 40% of your income, even though you wanted to keep it at 20%, you could easily become house poor.
3. Refinance Your Home
If at any point you are feeling house poor, you should consider refinancing your home. In some cases it might not be the best option for you, but in some cases it can help you save a good deal of money on your monthly payments.
For more information, contact local professionals like Exit Trinity Realty.
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