Owning a home is a great personal goal for many, as well as a fantastic way to build your personal wealth. Unfortunately, some home buyers make simple mistakes that can cost them thousands of dollars. Those who do more research before getting started with a realtor can be ahead of the game and by doing so, you will be able to save a lot of money over the long-term.
Go to Your Local Credit Union
When shopping for just about anything, it is important to compare options. We do this with computers, automobiles, and clothing, but almost never do it with a home loan.
Do not just go with any bank. It is recommended you check out a local credit union, and then compare the costs and personal service you receive there to a large bank like Chase or Bank of America. You may find that the same loan has a big price difference depending on where you go.
Compare the 15-Year to the 30-Year Loan
Most people think a 15-year mortgage is completely out of reach. Logically, they think it will cost twice as much, but this is rarely true because it doesn’t take that much more to remove 15 years off the life of the loan. Additionally, the interest rate on a 15-year mortgage is usually lower than that of the 30-year. Check out a FHA mortgage calculator to see what yours might be in both situations.
Lastly, if you pay off your loan in 15 years, then that’s 15 extra years without a mortgage payment. If you’re paying $2,000 per month, that’s $360,000 you can keep over that length of time. You could use that money pay for college tuition, retirement savings, or even a Ferrari!
Make a Large Principle Payment Early on
Let’s consider a hypothetical to see the difference a large principle payment can make:
Karen and her husband have a $300,000 mortgage. When they received their tax return the year they bought the home, they decided to pay an additional $2,600 toward the principle of the loan. This simple addition took 5 months off the life of their 30-year loan! That means that they have 5 less payments of $2,600 as a result of making 1 double payment! Can you imagine if they did this with their tax return every year?
Buying a home can be easier and less daunting than it appears. For more smart moves and creative solutions to your first home purchase, work with a First Team agent. You can search on our site for someone near you or reach out and we’ll search through out local experts to find one fit just for you.
Email us at clientservices@firstteam.com
Call us at 888-870-1142
This guest post is written by Brooke Chaplan, a freelance writer and blogger. She lives and works out of her home in Los Lunas, New Mexico. She loves the outdoors and spends most her time hiking, biking and gardening. Brooke is available via Twitter @BrookeChaplan.
