Getting Your First Mortgage
So, its time to buy your first house, and you need a mortgage. This is a big step that requires a lot of research to get just right. This article is here to help you make the best decisions, teaching you the importance of your down payment, how much you should be spending, and what to do if you can't afford your mortgage.
There are few hard and fast rules in the mortgage world, but one thing is clear: the bigger your down payment, the better. If you want to avoid paying excess interest or mortgage insurance, you'll want the big down payment. A big down payment will also lower your monthly payments, making the mortgage more manageable.
If you can't make a 20 percent down payment, you'll very likely have to pay mortgage insurance, which is an extra fee assigned to the loan to cover the bank for the extra risk. Obviously, you'd like to avoid paying it, but might be inevitable.
More than anything else, it is critical that you can afford to pay your payments each month. If you don't do this, financial ruin could befall you. One common guideline is that your mortgage should cost you no more than 35 percent of your take home income each month. Over extending yourself can have terrible consequences (as this latest mortgage crisis has shown). Be smart.
Once you know how much you can afford, you need to figure out what type of mortgage you want to get. There are many different types. The 30 year fixed rate is the old standby, but there are adjustable mortgages and all sorts of different terms you can choose from, so be sure to do research.
This may all seem a little overwhelming at first. The key thing to remember is that if you really can't afford to move in somewhere, don't overextend yourself trying. Just keep on renting. Its OK.
So, I hope this helps you understand the basics of shopping around for a mortgage. This is not something to be taken lightly, and full research is critical. Get the best rates, get something you can afford, and enjoy your new home!
There are few hard and fast rules in the mortgage world, but one thing is clear: the bigger your down payment, the better. If you want to avoid paying excess interest or mortgage insurance, you'll want the big down payment. A big down payment will also lower your monthly payments, making the mortgage more manageable.
If you can't make a 20 percent down payment, you'll very likely have to pay mortgage insurance, which is an extra fee assigned to the loan to cover the bank for the extra risk. Obviously, you'd like to avoid paying it, but might be inevitable.
More than anything else, it is critical that you can afford to pay your payments each month. If you don't do this, financial ruin could befall you. One common guideline is that your mortgage should cost you no more than 35 percent of your take home income each month. Over extending yourself can have terrible consequences (as this latest mortgage crisis has shown). Be smart.
Once you know how much you can afford, you need to figure out what type of mortgage you want to get. There are many different types. The 30 year fixed rate is the old standby, but there are adjustable mortgages and all sorts of different terms you can choose from, so be sure to do research.
This may all seem a little overwhelming at first. The key thing to remember is that if you really can't afford to move in somewhere, don't overextend yourself trying. Just keep on renting. Its OK.
So, I hope this helps you understand the basics of shopping around for a mortgage. This is not something to be taken lightly, and full research is critical. Get the best rates, get something you can afford, and enjoy your new home!
About the Author:
David Williams is the owner of the Denver Mortgage Loans site, devoted to helping you find the best Denver home loans and more.
posted by Credit Counseling at
6:19 AM
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