In Nigeria today, it has become easy for an average resident to share the financial burden of owning a home as a result of the enabling mortgage system in place and the high presence of mortgage institutions in the country.
However, undoubtedly getting a mortgage can be one of the biggest steps most of us would have to take, and buying a home can be the most expensive purchase we ever make, making it imperative that you avoid mistakes which are most likely to cause you to pay more than you should.
It is easy for a lot of people to jump at the prospect of free money, but do they know what the catch is? Or worse, if it’s a trap? Do they understand the terms and conditions properly? It is always wise to know what to expect, don’t be fooled by the terminologies some financial experts use to confuse novice(s).
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Don’t let the unfamiliarity and enormity of taking out a home loan scare you. People still make smart choices every day. They make a budget to see what they can afford, then get home loans with great interest rates, low fees and predictable, fixed monthly or yearly payments.
Avoiding mortgage mistakes will be a big step towards realizing the joy in home ownership and not see it as a burden. It would also put you on the path to long-term financial security.
If you are going to be in the market for a new home soon and you are considering taking mortgage, make sure you avoid making these top 7 mortgage mistakes below;
Mistake 1- Not Doing Proper Due Diligence
Nothing beats been extra careful. You need to find out why the property you are interested in is been sold as you don’t want to purchase what other people are trying to dispose of. Check very well to secure a mortgage, set a timeframe, and know the procedures and the right steps to take.
Make sure you do a careful search through an estate surveyor and valuer who knows his onions well as so many people fall victim to fraudsters in their pursuit of owning or purchasing a landed property.
Observe carefully when inspecting your prospective property, the protocols of sales and negotiations, research, investigate sales. Also, establish a good relationship with your broker/agent or seller and observe very well the regulatory side of property acquisition or purchase. Be familiar with the laws of your state too to avoid been swindled.
Mistake 2- Not Patiently Looking Around for the Best Offer
Whether it is a new car or the latest gadget, consumers know it pays to shop around for the best deal available to them. So also in getting a mortgage, devoting a little time to finding the best possible mortgage can save you a lot of money and interest over the lifespan of the loan. Talk to one, two or more banks to have a comfortable comparative analysis that will give you an advantage in your course.
Mistake 3- Not Been Wise About the Documentation Process
You need to be smart about the documentation, the processes, and protocols, Pay close attention to the check list and all other criteria such as the architectural drawings, bill of quantity, the application process, information to the bank about your earning capacity, expenditures and pattern. The bank will ask you for these before they tell you how much they can advance you.
Mistake 4- Ignoring the Penalty
Always consider the penalty clause to redeem your mortgage as this should give you a flexible plan option to pay off your mortgage or negotiate interest charges with your bank. Ensure you understand and review clauses banks impose.
Mistake 5- Stalling on Payment
While you’re investigating rates, don’t forget to look out for the fees! Many mortgages come fully packed with fees of all kinds. It is more advisable to pay all the fees at once because the quicker you do, the better the whole process goes. Some of these fees include; the cost of a certified true copy of the deed, stamp duties, endorsement fee, survey and facilitation fee, charting and registration fee, administration and consent fee, deed of lease or sublease. Never be ashamed or slow to ask questions pertaining to things you don’t understand.
Mistake 6- Not Reviewing your Credit First
Do a cash flow analysis of yourself, your profit and loss account and your personal balance sheet to see your financial strength even before going to the mortgage institution. Make a budget to know how much you really can afford.
Mistake 7- Not Understanding your Mortgage Terms
Talk to most homeowners and they are most likely to tell you about how complex, confusing and time-consuming the mortgage process can be. Knowing this, it is certainly a good idea to arm yourself with as much knowledge about the borrowing process as much as possible.
The moral of the story is to always understand what you’re signing up for. It’s not enough to know what your monthly or yearly payment is today. You also need to ask if the interest rate can change and if so, when and by how much will it increase.
If you’re not comfortable with the loan terms or don’t understand them, it’s better to walk away than to make an expensive and potentially life-altering mistake.
Overall, you can avoid all mortgage mistakes by doing adequate research before buying a property.
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