8 mortgage myths that waste time and money | Personal finance
Also, don’t forget to shop and apply for a mortgage with different lenders. This is the only way to make sure you get the best rate.
Myth # 5: A 30-year fixed rate mortgage is always the best choice
Over 75% of borrowers opt for a 30-year fixed rate mortgage, attracted by the long return on investment and the resulting low monthly payments. But other options may be better suited to your goals.
If you can afford the higher payments, you can own your home 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 are planning to sell your home in the near future, you may want to consider an adjustable rate mortgage. The interest rate on an ARM will be fixed for a period of time before it becomes adjustable and begins to reset. With an ARM 5/1, the initial interest rate is usually very low. Once it starts to adjust, however, the rate can increase dramatically.
Myth # 6: You should spend the maximum amount you are entitled to
You’ve budgeted and figured out how many homes you can afford. You feel comfortable buying a house in the range of $ 400,000. You apply for a mortgage and voila, you get approved for $ 475,000. Should you increase your budget?