Also remember to shop around and apply for a mortgage with different lenders. It’s the only way to make sure you’re getting the best rate.
Myth #5: A 30-year fixed-rate mortgage is always the best choice
More than 75% of borrowers opt for a 30-year fixed-rate mortgage, drawn by the long payback and resulting low monthly payments. But other options may be better suited to your goals.
If you can afford higher payments, you can own your home outright in less time and for less money with a 15-year fixed-rate mortgage. Shorter-term loans also tend to have lower interest rates.
If you plan on selling your home in the near future, you can consider an adjustable-rate mortgage. The interest rate on an ARM will be fixed for a time before it becomes adjustable and starts to reset. With a 5/1 ARM, the initial interest rate is usually very low. Once it starts to adjust, however, the rate can jump significantly.
Myth # 6: You should spend the maximum amount you qualify for
You’ve worked out your budget and calculated how much home you can afford. You feel comfortable buying a home in the $400,000 range. You apply for a mortgage and, lo and behold, you get approved for $475,000. Should you bump up your budget?