The idea to take a mortgage is the serious decision. A person who decides to take up a challenge should think twice not to get his fingers burnt. The main factors that ought to be taken into consideration are the following ones: ability to pay fee during the next years or even a couple of dozens of years; reliability of bank or assisting company, and, finally, economic situation along with inflation in the country. We are going to look at the most widespread mistakes which people commit while taking out loans.
‘The contract was so long, so, I have just signed it’
Perhaps, everybody heard similar stories or even had such luckless friends who got in troubles after having signing unprofitable contracts.
I remember one of my mate’s narrations how he took out a loan just looking through all the papers. At the end of the paper it was written in tiny letters that for every two years the rate would be expected to rise. You can only guess what he felt when having some anticipation, my mate, actually, had to pay much more than it was supposed beforehand.
Thus, remember, the affirmation ‘too long to read it thoroughly’ cannot be the key point when you should sign a contract. Moreover, if after second or third reading something remains unclear, do not hesitate to ask or consult with the private lawyer. Or, probably, apply to private mortgage financing company with the highest standards in the industry asking for guidance or explanations that appeared in your case.
‘I will think about it tomorrow’
It is likely that it taking out mortgage became too easy. In the meantime, it means apparition of a special category of people who just run out more and more debts thinking that once they are able to return all the money.
Once some co-worker in my company was complaining that he had been refused to take out a loan. He told about injustice and corruption of the current mortgage system… however, the case was that he wanted to take out the fifth loan not paying the previous four. In addition to that, we have found out that the amount of four preliminary debts were equal to the price of his house.
You see, this person did not take into account such a thing as debt-to-income ratio. Not having a stably high salary, he wanted more. When we asked him about the incentives of his behavior, he told: ‘I usually tell myself that I am going to think tomorrow about all these tough issues of returning mortgages and money problems’.
Certainly, such an approach will be easily noticed by lenders, and they are bound to leave you without a new mortgage.
‘I loved the interest rate, so, I took out a mortgage!’
The interest rate is generally the main factor which influences taking out a loan. No wonder, a great deal of lenders compete with each other setting higher or lower interest rates so as to attract the clients.
Nevertheless, even though the interest rate is enormously important, one should not ignore some other factors. Particularly, it would be an inexcusable error not to put forward the next questions:
- Which time period is the loan intended for?
- Which amount of payment should I expect?
- Could I rely on the fixed interest rate or is it going to vary in certain period of time?
- Could you provide me with the guarantees aimed at the interest rate?
- Is the mortgage I am taking out secured or, vice versa, insecured?
Definitely, the replies will shed some light into the whole situation of taking out loan. Consequently, you at least will be aware of the fact what to expect in future. Thus, no unpredictable problems or situations you are not ready for may occur.