real estate

4 big money mistakes of first-time homebuyers

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Choosing the wrong mortgage type
Choosing the wrong mortgage type | iStock.com

Choosing the wrong mortgage type

First-time homebuyers today typically opt for a 30-year fixed-rate mortgage.

But Harrison says home loan alternatives to a 30-year fixed sometimes make more sense. For example, buyers who are certain their companies will relocate them within five years may find a 5/1 adjustable-rate mortgage "could be a much better mortgage," he says.

"There's no reason to pay a premium for a product you don't need like a 30-year loan," Harrison says.

Homebuyers eager to build equity in their homes or who are older and want to live mortgage-free in retirement should consider a 15-year fixed-rate loan or, if they can afford it, even a 10-year mortgage to reach their goals.

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