Before You Take Out a Mortgage
Taking out a mortgage is a huge decision - one that will often have a significant impact on your finances for years to come. That’s why it’s so important to make sure you are as prepared as possible before you take the plunge, striving for equity and eventual full ownership. Here are some measures you should likely take and a few things you should probably know before you sign that dotted line.
Make sure you are prepared for the long-term financial commitment that taking out a mortgage entails. This may seem like an obvious one, but you’d be surprised how many people enter into a mortgage agreement without first having a clear idea of how much they can actually afford. This is not a decision to be made lightly, as it will likely be the largest debt you will ever acquire. Be sure to speak with a financial advisor to get an idea of what you can expect before making any decisions.
Keep in mind that your mortgage payment is not just the cost of the actual loan - it will also include interest, taxes, and insurance. Make sure to pay off any outstanding debts or payments that you can before taking on a mortgage, as it’s more difficult to stay on top of multiple finances at once. Also factor in any upgrades that may have to take place before you can take over the home. This is especially the case for older homes, so I would strongly recommend hiring an inspector.
Getting pre-approved not only makes you look more attractive to sellers, it can also give you realistic expectations when it comes to your budget.
In addition, be aware of the different types of mortgages that are available to you. There are fixed-rate mortgages and adjustable-rate mortgages, each with their own benefits and drawbacks. A fixed-rate mortgage will have the same interest rate for the entirety of the loan, while an adjustable-rate mortgage will start with a lower interest rate that will gradually increase over time. Be sure to speak with experienced professionals to find out which type of mortgage would be best for your situation.
Congrats! Taking out a mortgage is a big step in life. With the right preparation, ownership can be a wonderful experience. If you have any further questions, don’t hesitate to reach out and I can get you connect with a mortgage expert. Together, we'll get you into your new home.