Buying a home for the first time is perhaps one of the most exciting life experiences, but the smile on your face can quickly disappear the moment you’re unable to repay your mortgage.
Happily, you can avoid plunging into the financial distress associated with new home ownership if you start by carefully crafting a feasible borrowing and mortgage repayment strategy, a mortgage plan, as explained below.
Well, deciding that you want to live in a house with several high-end bathrooms and a Jacuzzi today is not rocket science. However, a proper home plan goes a step further and takes into account your future lifestyle needs. Having a good strategy before buying your next home can help reconcile your aspirations with your financial realities on the ground today and in the foreseeable future.
A foolproof mortgage plan considers all available lending options versus your current savings and income. So, after figuring out the cost of the home you want to live in, do you think you can afford the required mortgage down payment?
You should also start evaluating the long-run trajectory of your cash inflows and outlays to guarantee that prerequisite monthly repayments are within your financial means.
Your home-buying plan should identify the right type of mortgage to suit your current and future financial situation. Overall, there are fixed rate and adjustable rate home loans, and choosing the right one can yield substantial savings.
With the fixed rate option, you’ll be paying a constant interest rate over the mortgage duration, while an adjustable interest rate does fluctuate from time to time.
Likewise, consider if you want and can repay the mortgage over a 30-year, 20-year, or even 15-year term.
Thirty years is a long time, and your financial situation and priorities can change dramatically over that period. For example, do you think that, at some point in the future, you may afford additional principal payments toward paying off your mortgage, considering a possible increase or decrease of your income or financial responsibilities going forward?
If living in a home you don’t like leads to despair, taking a home loan you can’t afford is even worse! Thankfully, having a proper mortgage plan before buying your house can help forestall such misery because it takes into account your current and foreseeable-future financial situations.
At Rasha Ingratta & Mortgage Associates, we offer deep insights to help our customers pick mortgage solutions that satisfy their lifestyle needs and economic circumstances. Start with our Home Buyers Guide and then talk to us to make your plan.