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Thursday, February 5, 2009
It is staggering to see the number of choices that you have for your next mortgage. Once you see how many different mortgages are out there, you may want to know which one is right for your particular financial situation. Selecting a great mortgage is complicated and you are going to have to plan to do a lot of research and calculations and then plan on spending a lot of time to get the best mortgage possible.
When going mortgage shopping, you are going to want to make sure that you have a budget made out. When making a new budget, plan for the expenses that come for a new house, including property taxes, insurance and repairs; also don't forget about your nest egg. You never know when something is going to come up and you will have to make repairs on your house, so be prepared. Once you have your budget on paper, you should be able to see how much money you can spend every month on a mortgage payment.
Now, take a look at how much your dream house costs and compare that to how much you can afford. If your dream house is a lot more expensive than your budgeted mortgage payments, you need to find a new house. Taking out a mortgage for more than you can afford, even if you take out a less than traditional mortgage is very risky and should be avoided. Remember, you are going to have to pay off this mortgage, so you need to be able to afford it. You may think that your income is going to grow in time to help you pay off your mortgage, but you shouldn't count on it and risk your house. By being more pessimistic about the future rather than optimistic, you are going to be sure that you always have enough money for your mortgage.
Now that you know how much you are going to borrow, you are going to want to answer the question of how long you plan on staying in your house. If you plan on only staying in your house a couple of years and then move to a bigger and better house, you are going to want to make sure that you get a mortgage that is going to be advantageous to you in the short run and less advantageous to you in the long run. An adjustable rate mortgage is going to do that - it is going to give you a lower rate of interest for the beginning period and then a higher rate later on. This is good for first time buyers who are buying a starter house, but plan on upgrading in a couple of years when they start their own family.
Finally, you have gotten to the point where you should talk to some banks. After you have figured out what type of house you want and what you can realistically afford each month, you will be able to get good recommendations from the banks on the best mortgage for your situation. Every bank should be open and honest about the fees, interest rate and monthly payment on their recommended mortgages. The thing that may surprise you is that you are paying a huge amount of interest with each monthly payment. If you can, make double payments whenever possible so that you can pay off your mortgage sooner. Making extra payments in the beginning of the mortgage really helps to pay off the principal of the loan.
To pick the right mortgage you are going to have to do research. The research that you do now is going to save you money and trouble for the next 30 years.
When going mortgage shopping, you are going to want to make sure that you have a budget made out. When making a new budget, plan for the expenses that come for a new house, including property taxes, insurance and repairs; also don't forget about your nest egg. You never know when something is going to come up and you will have to make repairs on your house, so be prepared. Once you have your budget on paper, you should be able to see how much money you can spend every month on a mortgage payment.
Now, take a look at how much your dream house costs and compare that to how much you can afford. If your dream house is a lot more expensive than your budgeted mortgage payments, you need to find a new house. Taking out a mortgage for more than you can afford, even if you take out a less than traditional mortgage is very risky and should be avoided. Remember, you are going to have to pay off this mortgage, so you need to be able to afford it. You may think that your income is going to grow in time to help you pay off your mortgage, but you shouldn't count on it and risk your house. By being more pessimistic about the future rather than optimistic, you are going to be sure that you always have enough money for your mortgage.
Now that you know how much you are going to borrow, you are going to want to answer the question of how long you plan on staying in your house. If you plan on only staying in your house a couple of years and then move to a bigger and better house, you are going to want to make sure that you get a mortgage that is going to be advantageous to you in the short run and less advantageous to you in the long run. An adjustable rate mortgage is going to do that - it is going to give you a lower rate of interest for the beginning period and then a higher rate later on. This is good for first time buyers who are buying a starter house, but plan on upgrading in a couple of years when they start their own family.
Finally, you have gotten to the point where you should talk to some banks. After you have figured out what type of house you want and what you can realistically afford each month, you will be able to get good recommendations from the banks on the best mortgage for your situation. Every bank should be open and honest about the fees, interest rate and monthly payment on their recommended mortgages. The thing that may surprise you is that you are paying a huge amount of interest with each monthly payment. If you can, make double payments whenever possible so that you can pay off your mortgage sooner. Making extra payments in the beginning of the mortgage really helps to pay off the principal of the loan.
To pick the right mortgage you are going to have to do research. The research that you do now is going to save you money and trouble for the next 30 years.
posted by Credit Counseling at
2:42 AM
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