Now is a great time to think about owning a home. Property values are on the rise, properties are selling quickly, and average down payments are relatively low. Find out what your mortgage options are before you start the process of owning a home. Knowing your options is the best way to make the right decision and end up with the right property.
Consider Your Mortgage Options Before You Buy
Whether you’re ready to buy your first home or you just want to make a change, consider all of your mortgage options so you know what’s available. It’s essential to know all of your options because the mortgage you choose will ultimately affect the price of the home you buy.
First, are you buying a home for the first time? There is a special mortgage option open to first-time homebuyers, so be sure to mention this to your realtor. Do you have a downpayment for the home? The bigger your downpayment is, the smaller your mortgage costs will be. The average down payment in 2017 was $12,829, which is relatively low considering that homes may cost hundreds of thousands of dollars.
Many factors go into the mortgage options that are available to you. Your credit score will factor heavily into the mortgage you can afford. If you want to get an idea of how much your mortgage might cost, an online affordability calculator is a good place to start. This will give you an idea of your potential monthly payment, which in turn can give you an idea about the types of loans available to you. A mortgage broker or realtor can explain all your mortgage options after taking into consideration your downpayment, credit score, and other factors that determine how much money you can borrow toward the purchase of a property.
What to Know About Home Loans
Mortgages are long-term home loans. Most mortgages are designed to be paid off over 15 years, 20 years, 25 years or 30 or more years. The longer the term of the mortgage, the smaller the monthly payments. If you can afford to pay a little bit more per month, get a shorter mortgage. Once your mortgage is paid off, you truly own your property. You will make no more payments other than paying for the taxes on the property itself and you will own your home “free and clear,” as they say.
As long as you continue to make mortgage payments on time, your mortgage rates should stay fairly steady over the years. This means the payment will not change much even as the years pass, though some small increases are to be expected.
If you can make additional payments on your mortgage, do so! This money can be applied toward the principal loan, which means you’ll actually be paying off your mortgage a little sooner than expected. Nothing wrong with that! The more money you put toward your loan, the more equity you have in your home. This means you can get more money if you choose to refinance your property or sell your property to someone else.
Think carefully about your mortgage options and weigh your decisions. You want to pay what you can afford and make good choices about the property you buy and the size of the loan you get. When you know all of your options and have a clear picture of your finances, it’s easier to make the right decisions.
