3 Big Mistakes I Made With My First Mortgage

Image source: Getty Images

Learning from my mistakes can help you avoid ending up with the wrong home loan.


Key points

  • When I took out a mortgage for my first home, I didn’t know much about borrowing.
  • I didn’t shop around for different lenders.
  • I also didn’t pay a large enough deposit.

When I bought my first home, I didn’t have much financial experience and made some major mistakes when getting my mortgage. Unfortunately, these mistakes made the loan more expensive than it otherwise would have been.

Luckily, I was able to make the required payments and ended up selling the house for more than I paid, so it didn’t turn into a financial disaster. Still, the mistakes were regrettable and hopefully other future borrowers can learn from the mistakes I made so they don’t cost themselves money like I did.

Here are three big mistakes I made that others can potentially avoid in the future.

One of the biggest mistakes I made when I got my first mortgage was to just go with the bank recommended by my real estate agent. I did not receive multiple quotes from different lenders, but simply contacted the lender referred to me and accepted the mortgage loan offered to me.

By making this choice, I deprived myself of the opportunity to ensure that I had the lowest possible rate and charged a reasonable fee. To this day, I have no idea if I overpaid for this loan or if I could have gotten a better rate or not – but I suspect I paid more interest than I did. should have, because the rate was not very competitive compared to national averages at that time and I was a fairly well-qualified borrower.

2. Make a small deposit

I was really looking forward to buying my first house because I hated renting. As a result, I jumped into the purchase even though I only had a 10% down payment. Since I was putting less than 20% down, I had to pay for private mortgage insurance. This increased my monthly costs while protecting my lender and giving me no direct benefit.

Every month I paid PMI I was wasting money and the payments amounted to several hundred dollars. I could have waited a few more months, saved a little more for a 20% down payment and avoided this unnecessary expense.

Of course, that doesn’t mean it’s always a mistake to buy a home with less than 20% down. But in my case, my first house was very affordable compared to my income at the time and I had very few expenses. It wouldn’t have taken long to save more, so I wouldn’t have missed out on property appreciation or a long time to build equity if I had just been a little more patient.

3. Choose an adjustable rate mortgage

Eventually, I opted for an adjustable rate mortgage on my first loan because the rate was a bit lower than on a fixed rate mortgage, and I was considering moving or refinancing before the rate went down. begins to adjust. Although it ended up happening, it might not have been. I regret taking such a big risk and getting a loan with rates that could go up instead of protecting myself by making sure I knew what my total costs would be over time.

Fortunately, I now know better and have been smarter with subsequent mortgages. And I hope others can learn from my mistakes and avoid making similar mistakes when buying their own first home.

A Historic Opportunity to Save Potentially Thousands of Dollars on Your Mortgage

Chances are, interest rates won’t stay at multi-decade lows much longer. That’s why it’s crucial to act today, whether you want to refinance and lower your mortgage payments or are ready to pull the trigger on buying a new home.

Ascent’s in-house mortgage expert recommends this company find a low rate – and in fact, he’s used them himself to refi (twice!). Click here to learn more and see your rate. While this does not influence our product opinions, we do receive compensation from partners whose offers appear here. We are by your side, always. See The Ascent’s full announcer disclosure here.

Comments are closed.