Purchasing a home is a major decision in the lives of most of us. It is perfectly normal to to want a safe and comfortable home, to develop feelings for one place or another, to dream of the perfect home, to make plans and to imagine the future.
But for most people, buying a house is only possible with the help of a mortgage.
So, if you are planning to get a mortgage, you must plan carefully this step and start by asking yourself a few questions:
Are you really prepared to deal with all the related costs of a mortgage? After all, it is about paying, month after month, for years in a row (even 30 years in a row!), a bank interest rate. A mortgage loan obviously involves discipline and backup plans, in case of need.
Are you capable of financial self-discipline? If you are not very sure that you have the necessary discipline, try to save, every month, at least for a limited period of time, an amount on money equivalent to the rate you would pay for a mortgage. This is a very good exercise that, somehow, is similar to the method of tempering impulsive shopping by postponing the purchase. If you notice that you hate this kind of discipline, or worse, you fail to organize your income so that you can save money – maybe you should think again before entering into a 2-3-decade financial commitment.
Is the home you are preparing to buy really suitable for you? Maybe now, getting an apartment seems like a good idea, but what plans do you have for the future? If it is important for you to have a family and children, the space that now seems appropriate to you could become quite restrictive, to say the least.
Have you considered all the related costs to your new expense? Furniture, home appliances, renovation, monthly costs of administration, repairs, taxes, transport from and to your new address, etc. Put all costs on paper, draw the line and add up, do not simply settle for vague estimates!
Once you have gone through these questions, you will have to consider other important aspects.
First of all, do not be so eager to get at the maximum loan that the bank is willing to offer, if you do not really need all that money to buy your home; the price of a house can fluctuate over time, sometimes it is higher than its value, so it is not worth paying over a house`s real value, unless you are a rich eccentric person…
According to FHA loan Denver representatives, ask your bank for all the details and explanations you need, before deciding on the type of interest, which can be variable or fixed, at least for a certain period.
The insurances that the bank includes in the cost of the mortgage loan is not just an expense; they are really important, and actually it would not hurt to think about additional insurance (life, health), to be covered, in case of some misfortune.
If you encounter payment difficulties, avoid falling behind with the payment of the monthly installments. Contact your bank immediately and explain your situation. The bank wants your money back, not necessarily your home; it is an extra effort to get its money back through the sale of goods, so it will try to meet your needs with solutions that will help you continue to pay off your loan.