Foreclosure can be a very painful experience for anyone. Unfortunately, there are many home owners who lose their properties to foreclosure because of wrong decisions from the start. Here are some pointers to remember when obtaining a mortgage loan in order to avoid foreclosure:

Not Considering the Long-Term Implications of the Loan

A lender may qualify you for the loan just to get you to sign up with their company. Most loans that have adjustable-rate interests offer very low rate at the start of the loan. If you base you calculations solely on the “teaser rate”, it may be easy to say that you are indeed, qualified for the loan. But what happens when the adjustable rates begin to increase? As the Prime Rate in the market rises, so does that interest on your loan. Have you seriously considered whether your present income can support your loan for a long-term period?

Not Considering Other Costs

Most mortgage borrowers compare interest rates between different lending companies. However, the interest rate is not the only cost you should be concerned about. What about the cost of tax and insurance on your loan? Will you be able to afford it in addition to your monthly mortgage fees? It is best to inquire about these two major fees even before you take sign up for the loan.

Taking Your Lender’s Advice Without Doing Research On Your Own

Lenders may encourage you to take an adjustable-rate loan especially if you don’t have any plans of staying in the house for long. Before you agree, don’t forget to do more research on your own. How much difference does the adjustable-rate loan actually have against a fixed-rate loan? If you really take a closer look at it, you’re better off with a fixed-rate loan. Always remember, that an adjustable-rate loan only looks better because of its low starter rate. However, it puts you at a greater risk because the low interest can dramatically change in just a short period of time. With a fixed-rate loan, you have the reassurance that the rates will remain within your means for the whole duration of the loan.

Taking a Loan with Very Long Payment Terms

Some people think they can save more if they take a loan with a longer payment term. According to financial experts, a 15-year term is an ideal period for a mortgage loan. If you compare it with a 30-year term mortgage, the 15-year term comes with a lower interest and it also gives you the freedom to finish your loan term at an earlier time.

Choosing an Unreasonably Expensive Home

When purchasing a home, be realistic about how much you really can afford to buy. Some people tend to splurge on a very expensive home thinking that they can pay it off on time. Sadly, instead of obtaining a home property, the luxurious home ended up in foreclosure. Always remember that you will be paying it back for the years to come and that there is a possibility of losing it you fail to keep up with your payments. With this in mind, do your best to find a home that will be comfortable and suitable for your family at an affordable price.