Mortgage Rules to Live By

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Filed under: Market Comentary

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With mortgage rates still at incredible lows and the housing market continuing to pick up, many individuals are seriously considering a home purchase. If you find yourself in this position, it is good to remember that making the decision to buy will be one of the biggest commitments in your life. It serves you to know as much as you can about the mortgage process.

According to The Hour, an online publication, here are four mortgage rules to live by:

1. The Higher the Down Payment, the Better.

This probably seems like common sense but it is worth mentioning.  Even though it will be quite tempting to want to buy some fun things or splurge when you see all of that money in your bank account, you should remember that making a larger down payment will result in saving you thousands of dollars later in interest you don’t have to pay.

2. Optimize Your Credit Before Borrowing.

If you believe you are going to be purchasing a home in the next one to five years, it is important to pull your credit reports now and start working on them to improve your credit habits so you can get your credit score as high as you need. Did you know that you could possibly save up to $30,000 in interest payments on a 30-year fixed mortgage of $200, 000 just by improving your credit score by 50 points? That’s a good chunk of money you could spend on anything you want.

3. Work With an Experienced Mortgage Broker.

An experienced mortgage broker has access and well-established relationships with many lenders and can often get a better mortgage for you than what one specific bank is offering. The average potential homebuyer will usually walk into their bank and ask a bank for a loan, but a bank can usually only draw from the available mortgage products that their head office has created, so it is definitely advantageous to work with a mortgage broker.

4. Buy Only What You Can Afford.

The wonderful thing about mortgages is that they allow you to spread out the payments for the house you are going to buy instead of paying it all up front. It is very important, however, that the mortgage payments you agree to are never more than you can actually afford.  A plethora of homebuyers did not pay attention to this 5-6 years ago, and that was the key cause of the financial problem in the housing market. Homebuyers got into mortgages that at the time seemed really attractive at first, but then they found out they could not afford the huge payments.

If you are considering buying or refinancing your home and have any questions about the process, please feel free to give me a call so we can discuss how we can get you started on buying that dream house or refinancing the one you currently own.

 

 

 

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