Buying a home is often the most expensive purchase that a person will make in their lifetime. While many people have experts check a home’s foundation and plumbing before buying a home, they may not apply the same level of diligence when it comes to their mortgage. Traditional mortgages can last for decades and homebuyers need to understand the details of these complex agreements before they sign anything. Here we will discuss three common misconceptions homebuyers can have about their mortgage and ways that they can protect themselves from problems.
Here are some common misunderstandings that homebuyers can have about their mortgage:
Homebuyers must use their pre-approved lender: Some sellers want buyers to have loan pre-approval before considering them as a serious candidate. If a potential homebuyer receives pre-approval for a loan, that does not mean they must use that lender for their actual mortgage. Some buyers may want to get multiple mortgage quotes so that they can compare rates and fees before making a final decision. Too many loan applications can negatively affect a person’s credit score, so use care and work with an expert when choosing a lender.
Foreclosure is the only option: A change in income or financial emergency can cause families to fear a looming foreclosure. While homeowners should make every effort to pay their mortgage, there have options if they cannot afford their payments. Homeowners may be able to modify or refinance a loan to lower their payment to a more reasonable amount. Not every mortgage modification is favorable and homeowners should work with a skilled advocate to understand what will benefit them.
Mortgage protection insurance is always good or bad: Mortgage protection insurance can pay off a person’s mortgage if that person becomes disabled, dies or loses their job. People who work high-risk jobs or who have health issues may benefit from mortgage protection insurance. If a person already owns their home or if their mortgage total is low, other forms of insurance may be a better option. Deciding whether you need mortgage protection insurance depends on your personal financial needs.
How to prevent issues with your mortgage
There are many kinds of mortgages and the terms of these loans can depend on an individual’s unique situation. The details of a mortgage can also be hard to fully understand in the rush of closing on a home.
Because no two mortgages are the same, homebuyers should work with a knowledgeable attorney throughout the closing process. A lawyer can prevent issues with your mortgage and allow you to gain a full understanding of your rights. Mortgages are a long-term commitment and having experienced help can save you time and money.