A mortgage is a long-term loan that pays off the cost of your home in monthly installments. There are many things to consider when choosing the right mortgage for you. We’re here to help you make an informed decision when selecting the right mortgage for you. Play ball!
As you're stepping up to the plate...
Before you commit to a mortgage, due diligence is necessary: get your finances in order. A copy of your credit report is mandatory. If it can use a boost, closing credit cards you no longer use is an easy way to raise your score. Look closely at your finances and decide how much you can budget monthly towards paying off your mortgage-- and be realistic. Your budgetary restrictions might mean some properties will be out of your financial reach. Don’t trip before you’ve even started.
Put your best foot forward with your mortgage down payment. The standard down payment amount to qualify for a mortgage is 20 percent. If you’re looking to purchase a $200,000 home, that means you need to have $40,000 available up front. If you are unable to pay 20 percent, you might qualify for a loan through the Federal Housing Administration (FHA), but, depending on your credit history and other factors, those loans might trip you up down the line with high interest rates. The more you’re able to pay now, the less interest you’ll have to pay later.
Keep running forward on your mortgage and select the length of your loan. Most homeowners choose a 30-year loan, but if you have the cash, a 15-year loan might make more sense for you. Your monthly payment will be higher, but you will save a fortune in interest over the lifetime of your loan. Keep reading to settle the score…
The end is in sight, the crowd is cheering-- but now is not the time to get distracted. You need to decide between a fixed or an adjustable rate mortgage (ARM). A fixed interest rate is self-explanatory, your interest rate is set at the beginning of your loan and remains consistent over its lifetime. An ARM starts with a lower interest rate that is maintained for a set period, after which the interest rate will go up or down according to an index of interest rates and is reset periodically based on market trends.
The keys are in your hands, the stadium has erupted in applause. You’re a home owner. Over the lifetime of your mortgage there will be highs and lows, grand slams and large expenses. Strategy is the name of the game. Keep your credit score high, your debts minimal, and you’ll be in excellent shape for many seasons to come.