The New Truth About Mortgage Lenders
What Most Mortgage Lenders Don't Want You To Know
Experts used to advise consumers to borrow as much money for a home as the mortgage lenders were willing to lend. However, the real estate world has changed drastically over the past couple of decades. With new loan programs, mortgage lenders are able to qualify homebuyers for larger loans. However, these newer loans may not have the homebuyer's best interests in mind.
How Old Will You Be?
Many homeowners don't plan on staying in their homes forever, but if you're buying a home for the long-term, you may not want to borrow the top dollar amount the mortgage lenders qualify you for. It used to be that the longest mortgage term available was 30 years, however, 50-year mortgages are becoming increasingly common.
Why isn't a 50-year mortgage a good idea? Let's say you don't ever plan to sell the house you're buying. If you're 30 years old when you take out the mortgage, you'll be 80 when the loan is finally paid off. I don't know about you, but having a big mortgage payment makes retirement unfeasible for many homeowners and not many 80-year-olds work full time.
The Interest-Only Issue
Many of the loans that mortgage lenders are pushing nowadays are no-interest loans. Yes, you'll have a smaller mortgage payment and you'll be able to buy more house, but you'll never pay your home off and you just might lose it to foreclosure if you can't keep up with the terms of the loan or pay the huge payment difference when the interest-only period matures.
A Word to the Wise
Remember, just because the mortgage lenders say you can afford a $300,000 home, it doesn't really mean you can. Instead of buying as much home as you can afford, keep your price down to a level that will allow you to pay off the home within 15 to 20 years.