To own a home, you have to be smart with your money and use your head. The first step is to sit down and look at your finances in detail. Then decide to buy a house where the down payment and monthly payments are within your budget. Don't spend more than you have. If you can, talk to a financial expert and think about putting down a bigger down payment.
Cost factors will include the total cost of the home, the most you can spend on housing each month (about 32% of your gross monthly income), and the amount of debt you have each month (not more than 40 percent of your gross monthly income). Try to keep the amount of debt as low as you can.
Almost everyone's dream is to have a lower monthly mortgage payment. This can be done in a number of ways:
Since interest rates change all the time, you would need to keep track of them and refinance when you can get a better rate. This would help you spend a lot less. Do the math to figure out how much you will save after you pay closing costs and other fees.
- If you have a short-term mortgage, you might want to switch to a long-term mortgage. This will help you get through the tight spot and allow you to pay less each month. You could always foreclose on the loan if your situation got better.
- Ask for the insurance you're paying for to protect your mortgage to be cancelled. Once you've paid off 20% of your loan and have a good credit history, ask the lender to let you off the hook for the insurance payment. This will help you spend less each month.
Find out where you can get cheaper insurance rates for your home. You will be able to lower your principal, interest, tax, and insurance payments (PITI).
- Check your calculations often to make sure you're making all the right changes.
Choose a mortgage that gives you some freedom. Every day, interest is only paid on the amount still owed. This means that you can pay off the mortgage based on how much you make.
- Think about an accelerated equity plan or making payments every two weeks. This will help you get rid of your load faster and give you big benefits.
Look over the details of your mortgage and figure out what the principal and the interest are. Try to pay a little more than what's due each month so that the extra goes toward the principal. By paying down the principal, you'll save a lot of money on interest.
Try short-term loans or loans with variable rates. Find out about "teaser rates," which are short-term loans with lower interest rates.
Combine all of your loans into one with lower payments. Study all the loans, including those for the house, car, education, and so on. Make a table to look at the cost. Talk to a mortgage expert to find out what consolidation means and how much your monthly payments will go down.
A mortgage or home loan is a long-term debt that can be hard to pay off. The mortgage should be paid off as soon as possible. Keep an eye on interest rates, insurance, and loan payments to manage your money well.
