Things To Know Before You Decide To Purchase a Home

Before you dive into the decision to purchase a home, you need to be aware of some important points. Read on for things you should (and must!) know before you purchase a home.

1.    If you are not ready to settle down in your life and have an adventurous soul that has you moving from place to place (or a job that requires such) then you should hold off on the purchase of a home until you are ready to stay in the same place for enough years to make the price of buying and selling worth your while.

2.    The purchase of a home means the need for a mortgage. Before you start looking for a house, find out how well you are faring with your credit. Obtain a copy of your credit report and look it over very carefully. If you find a mistake then have it corrected immediately.

3.    The purchase of a home is a costly endeavour. Buy a home that you can honestly afford. It is generally considered that most people can afford to buy a home that is approximately two-and-one-half times what they earn in a year. However due to the changing economy and the fact that many people have incomes that fluctuate you would be wise to do a realistic calculation of your income, expenses and debts to determine what is affordable for you.

4.    It is standard to put down 20 percent for a down payment when you purchase a home. If you cannot afford that much then rest assured that there are mortgage lenders who offer low-interest mortgages where the down payment can be 10 percent, five percent or even three percent. Do not be deterred from the purchase of a home because of a lack of the standard down payment.

5.    Before you start looking to purchase a home, get pre-approved for a mortgage. Pre-approval from a mortgage lender will put you in the best position possible to look for houses in your price range. This will save you time and will help prevent disappointment. Pre-approval from a mortgage lender is based on your income, the amount of debt you carry and your credit history.

6.    When it comes to choosing a mortgage to purchase a home you will likely be given the option of paying additional points in order to have a lower interest rate. In other words, you can pay a portion of the interest that you would pay at the closing of the purchase of your home ahead of time. If you plan to live in the house for any where from five to 10 years or more than it will be to your advantage to take the additional points.  The purchase of a home is expensive enough and therefore a lower interest rate can help save you more money on a long term basis.

Save Money On Your Home Mortgage

Your mortgage is probably the single largest payment that you are responsible for paying each month. If you are currently struggling to make your mortgage payment every month, there are things that you can do to lower your payments.

Another tip is round up your payment. Every penny or extra dollar you spend now, will help reduce the amount you owe, and the amount you pay in interest over the course of your loan. If your payment is $978.34 a month. Round it up to $1000.00.

The easiest option to save money on your mortgage is to refinance your home. Many times you can qualify for a better rate, or a different home loan program with a lower rate that will help free up some money with your monthly mortgage payment. Refinancing can not only lower your payment and save you money but many times consolidate debt, get some extra cash out and usually give you a month or two without a monthly mortgage payment.

One way to save money on your mortgage is to improve your credit scores. Your credit score directly effects your mortgage payment. Most people have errors on their credit report that lower their FICO score. Be sure to ask your preferred mortgage professional if your credit scores can be easily improved and how much you can save.

If you are really stretched with your total monthly payments, you may want to consider an interest-only mortgage. Since you pay only interest, no principal, your monthly payments will be lower. When you have the funds, however, it’s wise to make principal payments whenever possible.

Though making mortgage payments bi-weekly is a great idea that will save you money in the long run, you should not pay a fee for making bi-weekly payments.

You will get the same benefits of a bi-weekly mortgage by making an extra payment every year. You can do this in one lump sum. Or you can take the amount of your monthly payment, divide it by 12 and then add that amount to your regular payment every month.

You will pay off your mortgage sooner and pay less interest over the life of the loan.

You may be able to make a bi-weekly payment plan with your mortgage. This may help you save money in the long term by cutting years off of your mortgage. This may also help you budget your monthly expenses better because most people do not get one monthly pay check, often companies have a bi-weekly pay roll period.