So, its time to buy your first house, and you need a mortgage. This is a big step that requires a lot of research to get just right. This article is here to help you make the best decisions, teaching you the importance of your down payment, how much you should be spending, and what to do if you can't afford your mortgage.
There are few hard and fast rules in the mortgage world, but one thing is clear: the bigger your down payment, the better. If you want to avoid paying excess interest or mortgage insurance, you'll want the big down payment. A big down payment will also lower your monthly payments, making the mortgage more manageable.
If you can't make a 20 percent down payment, you'll very likely have to pay mortgage insurance, which is an extra fee assigned to the loan to cover the bank for the extra risk. Obviously, you'd like to avoid paying it, but might be inevitable.
The biggest key with a mortgage is to make sure you get one you can easily afford. A common rule of thumb is that no more than 35 percent of your take home income should be your mortgage payment. Over extending yourself can have terrible consequences (as this latest mortgage crisis has shown). Be prudent.
After you have sorted out the matter of how much you can afford, you'll need to decide on which type of mortgage you want. The class standby is the 30 year fixed rate mortgage, which means you lock in a fixed interest rate over 30 years of payments. You can also get mortgages with varying rates, and shorter terms. Be sure you research all these options.
If all this seems daunting, remember that there is no harm in renting until you can afford the mortgage you really want. Over extending yourself is always a bad idea.
This covers just a few of the basics of shopping around for a mortgage. The key is to seriously look at your finances, and do all the proper research before pulling the trigger. Get the best rates, get something you can afford, and enjoy your new home!
There are few hard and fast rules in the mortgage world, but one thing is clear: the bigger your down payment, the better. If you want to avoid paying excess interest or mortgage insurance, you'll want the big down payment. A big down payment will also lower your monthly payments, making the mortgage more manageable.
If you can't make a 20 percent down payment, you'll very likely have to pay mortgage insurance, which is an extra fee assigned to the loan to cover the bank for the extra risk. Obviously, you'd like to avoid paying it, but might be inevitable.
The biggest key with a mortgage is to make sure you get one you can easily afford. A common rule of thumb is that no more than 35 percent of your take home income should be your mortgage payment. Over extending yourself can have terrible consequences (as this latest mortgage crisis has shown). Be prudent.
After you have sorted out the matter of how much you can afford, you'll need to decide on which type of mortgage you want. The class standby is the 30 year fixed rate mortgage, which means you lock in a fixed interest rate over 30 years of payments. You can also get mortgages with varying rates, and shorter terms. Be sure you research all these options.
If all this seems daunting, remember that there is no harm in renting until you can afford the mortgage you really want. Over extending yourself is always a bad idea.
This covers just a few of the basics of shopping around for a mortgage. The key is to seriously look at your finances, and do all the proper research before pulling the trigger. Get the best rates, get something you can afford, and enjoy your new home!
About the Author:
David Williams is the owner of the Denver Mortgage Loans site, devoted to helping you find the mortgage brokers in Denver and more.
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