3 Mistakes To Avoid When Purchasing A House

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Buying a home is an exciting time of life. Many people look forward to the time when they will be able to purchase their own home, but in their excitement make some costly mistakes. Here are some mistakes you should avoid when purchasing a home.

1. Ignoring The APR

When you talk with your lender, they will quote you an interest rate on the loan. Although this number is important, it is not nearly as important as the actual annual percentage rate (APR). Many companies will give you a low interest rate, but the actual APR is much higher. The APR is usually higher than the interest rate from the lending company. There may be extra fees, closing costs and extra costs associated with the loan. When you are calculating how much the monthly payments will be, ask the lender to give you the amount based on the insurance, APR, and the principle payment. This will help you to get a more realistic idea of how much your monthly bill really is.

2. Buying For Your Future Budget

When you enter a job, you may have been promised an eventual raise or a promotion. Although this is something to hope for, it is not something to plan on. Many people purchase a house based on what they think, or hope, that their income will be. The concern with this is that it could take years to get that promotion, or it could never happen. Coincidentally, you may have bought a house that you will forever be house poor in.

Instead, assess your current budget and decide what is best for you and your current situation. Then if things get better, you can upgrade, or you can pay off more of the house. If things don't get better, you are no worse off.

3. Letting The Bank Tell You What You Can Afford

Before you go to the bank for the loan, you should know how much you want to spend. The bank may give you a bigger number, letting you know that they will lend more money to you. Although you may think it would be great to have a bigger house, remember that you are the one making the payments each month. The bank doesn't know your individual budget and how much you want to spend on housing. This is why it is important that you decide what you can afford and then stick to it.

By avoiding these 3 mistakes you can make sure that you are buying the right house for your budget. Keep these tips in mind as you begin looking at houses for sale in your area. 

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