You’ve went over your budget again and again, and one thing remains true — your financial status is healthy enough to sustain a mortgage payment for the next 10 to 30 years. But how many years exactly is the question, right?
If you have found yourself walking among the buyer’s real estate market, you can take comfort in knowing that there are many deals available right now. In fact, with the nation coming out of its latest recession, interest rates are at a historical low, meaning it’s time to lock in and buy now! Here’s a quick look at a few tips you can take to make sure you are securing the best mortgage loan possible for you and your lifestyle.
What amount can you afford?
There is a major difference between living paycheck-to-paycheck and living comfortably. If you aren’t living comfortably, then the longer the term of the mortgage loan, the better. Why? Because no matter how well you plan for life, there are going to be unexpected expenses that you will want or need to cover. For example, even if you don’t plan on dishing out $18,000 for a new roof, a natural disaster without proper insurance coverage could very well drain your bank account. A longer-term mortgage will have a lower monthly payment, and it will also provide you with many more years to refinance your loan in a way that accommodates your lifestyle both now and in the future.
What term is the right option?
The term of your mortgage for your new home depends on your particular situation and stage of life. If you’re looking for a way to boost your credit and pay off your mortgage in a short amount of time, then purchasing a home using a 10-year mortgage loan may be the best option for you. A 30-year mortgage may be the right option if you plan to be in your new home long term, more than 7 years. No matter the amount of the mortgage, though, please keep in mind that your payments will be higher the shorter the term of the mortgage.
To learn more about calculating the right loan for you, please check out our mortgage calculator today at Mercers Savings.