Paying for a mortgage can sometimes be a confusing process, and the banks do not make it any simpler. With all the confusing jargon, it is quite easy for us to make the wrong moves and wind up with a sub-par home loan. But, unluckily, this could cost you a fortune over the life of your loan. So, look out for these home loan traps.
Staying loyal to the banks.
Relying on your local bank branch is one of the most common traps. These banks will only offer you their own home loans, even if they are aware that there are better options in the market. Bank staff has a target to accomplish at the end of the day to sign up new customers, and not introduce them to their rivals. Do not trust your local bank branch blindly. Weigh the pros and cons of other financing companies out in the market or visit a mortgage broker.
Ignoring challenging lenders
Another mistake is people never seem to research outside the bigger banks in the market. This is because many people think that smaller lenders are unsafe. Keep an open mind about them, explore the credit unions, building societies, and non-bank lenders. Or you can visit BC-Loans.com for Instant Loans.
Fixating on interest rates
Yes, we understand that interest rates are important, but they are not the only factor you should look out for. Choosing the cheapest mortgage just for the sake of saving money will not provide you with the best features. You should also pay attention to extra features like fees etc. You should treat features and fees as seriously as you consider the interest rates.
Overlooking the comparison rate
Do not focus solely on the advertised rate rather than the comparison rate. The former is usually an artificially low figure as it includes no fees. The latter is a better choice as it does include fees. The difference between the two is that their rates can be minuscule or non-existent. Research well before applying for the mortgage.
Stretching out the mortgage.
Just for the sake to reduce your monthly payment, choosing a 40-year loan term over the standard 30 years may seem like a smart move, but it will significantly cost you a fortune over the life of your loan. It is best recommended to go for a 30-year loan term.