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When most people think about buying their first home, a mortgage is the last thing on their mind. Instead, they’re thinking about finding the perfect home and how they will decorate. They’re prioritizing looking for a home that ticks all of their boxes instead of a home that they can afford with a mortgage. In this day and age, nearly everyone needs a mortgage to buy a house. Houses in most areas are far too expensive for someone to afford without a bit of help from the bank. With that being said, very few people know much about mortgages at all! When getting your first mortgage, you should be using a mortgage calculator with taxes and insurance and you should be familiar with extra payments and your amortization schedule. If you’re soon to be a first-time homebuyer, here are a few things you should know about your first home mortgage:
1. You’ll need good credit
Buying a house is incredibly important for you- but can be a huge risk for a bank. Banks don’t want to give mortgages unless they can be certain that they’ll get paid back. If you have poor credit and request a mortgage, chances are you’ll be declined. Before you even request a mortgage, you should first get a copy of your credit report. This detailed report will be the same thing that the bank sees when you request your loan. If your credit score isn’t as high as it should be, find ways that you can improve it before you need the mortgage.
2. Only borrow what you can affordWhen it comes to a mortgage, you should only borrow what you know you can afford to pay back. Many first time homebuyers assume that their mortgage is the only housing payment they’ll need to make monthly. This isn’t the case. Homeowners still need to pay property taxes, homeowners insurance and any maintenance costs associated with the home. Make sure that you will be able to afford your monthly mortgage payment in addition to these other monthly costs. |
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3. Use a mortgage calculator
A mortgage calculator- especially a mortgage calculator with taxes and insurance is an amazing tool for first-time homebuyers. A mortgage calculator is beneficial in several different ways: it is incredibly accurate, it can help you become independent during mortgage negotiations, it helps you compare different lenders, and it ultimately helps you save time and money. A mortgage calculator with taxes and insurance is especially helpful because it is multi-functional.
4. Understand your amortization schedule
Understanding your amortization schedule can help you stay on top of all of your payments- including extra payments. An amortization schedule details each loan payment and shows you how much of the payment goes towards the principal and how much goes towards interest. By familiarizing yourself with this schedule, you can be sure to pay the right amount for each payment on time.
A mortgage is one of the largest and most significant financial commitments you will make in your entire life. Before buying your first house, it’s crucial that you have familiarized yourself with a mortgage calculator and your amortization schedule, at the very least. Hopefully, these tips will help you prepare yourself adequately for your first home mortgage.