There is so much to know when you're buying a home. The buying and financing process pretty much stays the same over the years; in fact, it's become more streamlined than ever, so it has actually improved a bit. Unfortunately, there's still a lot of fine print that many potential home buyers aren't aware of. Here, you'll find a few pieces of information that can help you avoid mistakes as you take out a mortgage for your home.
Do you plan on being the sole resident of the home? If so, you shouldn't run into any problems, but if you plan on buying the home so that you can use it as a rental or a vacation rental, you may need to look more closely at the terms of the loan.
Some mortgages carry a requirement that the resident of the home must be the person carrying the mortgage – this means if you purchase the home with this type of mortgage, you will not be able to rent it out for any reason – you will have to reside there. If the financier finds out that you're not complying with the terms, they can call back the loan and actually leave you homeless or looking for a new lender.
When you take out a mortgage on a property, you will be required to carry homeowner's or property insurance. If there's a structure on the property, homeowner's insurance will be needed. If there's no structure and it's an empty lot of land, property insurance will do.
As you read through the loan terms, look for information regarding the insurance requirements. They may have a minimum value that can be applied to the insurance – this means that the insurance must cover the cost of the mortgage.
Another thing to look into is the deductible. Some lenders require the deductible to be set low so that homeowners don't struggle to come up with the funds when they need them for a claim.
You can also get loan insurance to protect the home in the event that you are seriously injured or worse – this insurance will cover the cost of the loan payments until a set date or until you can return to work. This does come at an additional cost – ask your lender.
Knowing these three things can help you to avoid mistakes that previous home buyers have made – hopefully, the preparation will help you avoid those same mistakes.Share