Qualifying for a mortgage is not what most homebuyers consider the most exciting part of the purchasing process, so the quality of the mortgage payment may not be high on the usual list of priorities. While you’re busy researching interest rates and looking at potential homes, I will cut down on your screen time by sharing what I think are the 5 characteristics of a great mortgage payment.
- It’s Affordable
A great mortgage payment should not break the bank. The last thing a new homebuyer needs is to be ‘house poor’ while adjusting to their new life as a homeowner. As there are other costs and expenses associated with home ownership, it’s important to ensure your new mortgage payment is not going to eat up the majority of your disposable income. Expect the best and prepare for the worst, and don’t forget to account for the unexpected. What I mean is, set yourself up with a house savings account that you contribute to monthly so there are funds assigned to maintenance and repairs. If your mortgage payment is affordable you will always have a little leftover to cover any surprise costs associated with your new home.
- It’s Flexible
Following the topic of affordability comes flexibility. If you do have extra cash available, you should have every opportunity to use it to reduce your mortgage principal sooner. I say a great mortgage payment also includes generous pre-payment privileges as every extra little thing you can do to reduce the mortgage balance owing helps over the long term. Some discounted low mortgage rates come with limited or no pre-payment privileges and for a rate that is a little higher you would have the ability to double up, make lump sum payments, or increase your payment amount. Alternately, if there happened to be a traumatic event in your life where you were having a problem making a payment, working with a lender that is willing to work with you in the event of hardship could be very important. Prior to committing to lender, it doesn’t hurt to ask your mortgage professional about each lenders position on mortgage default timelines.
- It’s Understandable
A great mortgage payment is a simple mortgage payment. Before your first payment comes out of your account you should be aware of exactly what amount is due. Does it just pay the principal and interest on your mortgage, or does the payment amount include interest adjustment costs as well as a property tax portion too? Those questions become even more critical if you’re on a variable rate mortgage where the interest costs change with any increase or decrease in the Prime Rate. Whichever mortgage options you do select, you should know exactly how much you’re paying and what you’re paying for. This is an important item that should be covered in great detail with your mortgage professional as you are reviewing the mortgage options available to you. Don’t be afraid to ask questions until you fully understand how your new mortgage is going to work.
- It’s Helpful
Your new mortgage payment should get you closer to your financial goals rather than further away from them. If your first financial goal was to be a homeowner, congratulations you’re there! Next up is establishing a strong savings account balance, maintaining a great credit score, and increasing your wealth through diversified investments. A great mortgage payment will help you to accomplish these financial goals, allowing you to use the extra cash for vacations, secondary school for the kids, and then retirement. The difference between a home that is just affordable and one that is helpful is how you use it. Turn your home into an investment vehicle to help you achieve your financial goals sooner by speaking with an experienced mortgage professional, as well as a financial planner about mortgage solutions that aren’t just simple financing, but part of a larger wealth building strategy.
- It’s Low Maintenance
If your mortgage payment is keeping you up at night, you need to make a change, especially if you haven’t even moved into the place yet. Low maintenance means something different to every borrower. It could mean a mortgage payment you can easily keep track of so nothing is getting missed, one that doesn’t drain your bank account on each payday, or one that is the same amount for the next 5 years. This is especially important when it comes to selecting a variable or fixed rate mortgage term. Whatever you define as minimal effort required, make sure you convey the message to your mortgage professional as this kind of information allows them determine which one product out of the many will suit your needs and meet your expectations.
What separates an okay mortgage payment from a great one is how much time you have to find the perfect product for you and your financial circumstances. Getting a mortgage pre-approval allows you to prepare yourself for what to expect, and gives you the time to make adjustments to your potential home options before the pressure of writing an offer has come into play. If you’re past the point of a pre-approval, at least give yourself some time on your financing condition to explore the mortgage payment options available to you before committing to just one.
For all of your mortgage needs, contact Jackie at 780.433.8412 or firstname.lastname@example.org. Stay in the loop by following on Twitter @mortgagegirlca.