Buying a home is definitely an exciting step in life, however, you want to be sure that the excitement doesn't overwhelm you and lead to a potentially bad decision, especially when it comes to taking out a mortgage. The mortgage makes up your monthly budget from here on out, after all. To help you choose the right mortgage, here are five things to consider:
- The Deposit: Every lender is going to require a different deposit amount. You obviously want to be sure that the deposit is something you can afford, otherwise you won't be approved. You can always apply for a loan to pay for a deposit, as well, just bear in mind that is going to add to your monthly expenses, which can lead to you having lower your budget for buying a home.
- The APR: Next, you want to determine what the APR is, which is determined based on your personal credit. You may want to improve your credit even more to make it work out to a lower rate. If the APR is high, then this means you are paying even more monthly, which just takes another toll on your budget for your home.
- The Mortgage Fees: Next, you want to determine what the mortgage fees will be, which is set by the specific lender. Some lenders won't have any at all, so you might want to consider working with these lenders over another if you can avoid additional costs. However, the APR still has to be low, as well as the deposit if you need it to be.
- The Breaks: At some point over the course of paying for your mortgage, you may need to take a break from payments. This happens because you may lose your job, your income could decrease, or your lifestyle can change. If you need to take a break, you want to be sure that this is possible without facing high fees and interest.
- The Budget: Finally, you want to understand what you can afford each month on living expenses. The best way to do this is to use the 50/20/30 rule, which is where no more than 50% of your income is going towards fixed costs. If more than 50% of fixed costs will be going to your mortgage, then you need to lower your budget. Otherwise, you can find yourself in a situation where you are struggling to afford other things.
Considering these five things is the best way to find a mortgage that is going to work for you and thus a home that is perfectly suited to your financial situation. Contact a law office like Ianniello Anderson, P.C. for more information and assistance.