Here are 6 Basic Mortgage Rules To Follow.
Whether this is your first home or fourth, really understanding your mortgage and how it works is crucial. After all, it’ll probably be the biggest loan of your life!
What IS A Mortgage?
In the most basic sense a mortgage is a loan to buy a property. The process of securing a mortgage means lender approval based on your income, credit rating and other debt.
Understand Your Fixed Costs
Before you decide what you can—or should—spend on a mortgage it’s important to take stock of your habits and your true fixed costs. Be honest with yourself when putting together your household budget, if you’re going to be miserable without your daily premium cup of coffee, then along with your student debt and car payments, consider that a fixed cost.
Be Safe
Your monthly housing costs should be less than 32% of your gross monthly income. These are considered your Principle and Interest (of your mortgage payments), Property Tax, and Heating bills.
Get A Mortgage You Can Afford
The second test of what you can afford mortgage-wise is that your entire monthly debt load (car payments, credit card debt, student loans, etc) should be less than 40% of your gross monthly income.
Paying Off Your Mortgage
Once you’re approved for a mortgage and buy your home (congratulations!), now you have to actually start paying off the loan. There are several factors involved in this like your interest rate, payment schedule (monthly, twice a month, every two weeks, or weekly) and your amortization period, which is the amount of time you’ve selected to pay back the mortgage (usually ranging from 15-30 years).
Picking The Right Interest RateThe interest rate at which you select to pay off your mortgage varies from “fixed”—whereby the rate will NOT change for the term of the mortgage, and is generally a bit higher but considered more stable, or “variable” whereby the interest rate can fluctuate with the current state of the market.
Finally, owning a home can truly be an amazing thing. Thankfully there are many resources out there to help make the process a smooth one like mortgage brokers and financial advisors, so remember, you’re never alone through this daunting process!
When you are ready, let's go find that perfect home for you.Our team of preferred lenders will help you get
a home loan that's right for you, and get you pre-approved today.
Here to help!
Terry Naber, Broker Associate
Your Good Neighbor In Real Estate Since 1990!
Go to www.TerrySellsColorado.com
Call us at 719-590-4796
REMAX Properties, Inc
1740 Chapel Hills Dr
Colorado Springs, CO 80920
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