If you are about to venture into home buying, you're gonna need a few honest advice. Here are some of the most honest pieces of advice you're going to hear about real estate buying:
1. Listen to real estate professionals (agent / lender), but keep in mind that the final decision is yours, and yours alone.
Sure lenders don't want you to borrow a lot because of the risk of not being able to repay the said debt. However, it is also worth knowing that lenders earn more if you borrow more. So, it is possible that the lenders will offer you more money if they see that you are capable of paying it. After all, they just base their calculations on your financial documents. But the thing here is, they don't know your future financial plans. They don't know about your savings plans for retirement and they don't know how much money you want to share to your kids when they go to college.
So, as a summary, don't let the lender tell you how much loan you should get. If you think that getting a bigger loan would hinder your savings plans, ask for a lower mortgage amount.
2. Don't be a pushover.
With the rising home prices, there are lenders who venture in different kinds of mortgages, including ones that require really low initial payments. This deal may look like a good one, especially if you are excited to buy a home. However, don't let excitement get the best of you. Even if lenders and/or agents offer you such good looking deals, keep in mind that very low initial payments that cannot cover your interest would only lead you to having a growing balance. As a quick piece of advice, choose the right mortgage based on your own computations. Also, be sure that you are ready to buy a home.
3. Protect your equity.
People who have seen a rise in their home's value, typically went for home equity line of credit or HELOC, which may not be the wisest decision you'll make. Going for this means you're converting your equity into debt. So unless it is highly necessary, it is not recommended to borrow against your home's equity.
4. If possible, pay your mortgage in full.
If you are already old enough and have zero plans of moving out of your home, this may be the best time to finally pay off your loan. Paying your mortgage in full before retirement is one of the biggest help you can give yourself if you want to live stress free life. Some people say that this move is not recommended since it would mean giving up the tax break that a mortgage interest deduction comes with. However, according to a source's calculations, the interest tax deductions also decline the longer your loan is being paid off. Plus, it's not just about taxes, it's also about finally owning your home, and ultimately getting rid of the largest monthly debt you have.
