MORTGAGE Blog & ARTICLES
Proven Mortgage Planning Tips that Bring Results
When financing a property, the following tips can help you to sale cash and open opportunities to provide better economic stability in case of financial challenges in the future such as increased monthly expenses, lower income levels, and high mortgage rates.
Tip No. 1: Consider a much lower mortgage amount than the maximum your budget can afford.
There were two simple calculations used by mortgage professionals in calculating the maximum mortgage amount you can afford; the Gross Debt Ratio and Total Debt Service Ratio. In the Gross Debt Service ratio, your total monthly housing cost should not exceed more than 32% of your total gross monthly income. Your total monthly housing costs is the sum of the cost of the mortgage principal and the interest fees, heating expenses, taxes, and half of the total cost of monthly condo fee if you’ve purchased a condo unit. The Total Debt Service ratio assumes that your total monthly debt load must not exceed fourty percent of your gross monthly income.
While these calculations can help to determine the maximum cost of mortgage you can afford, getting a home financial does not guarantee to leave you with much greater room to comfortably deal with unexpected changes in your gross monthly income. It is recommended that you obtain a smaller housing financing to make sure that your mortgage premiums stay at your means.
Tip No. 2: Analyze and evaluate the potential impact of increasing interest fees on your mortgage premiums.
For the past few years, the cost of mortgage interest fees remained low. While this helps home ownership to be much more affordable in the part of home buyers, an increase in mortgage premiums these days means a huge impact to your future housing cost. Evaluating the impact of increase in your mortgage premiums helps you to avoid financial problems in the future.
Tip No. 3: Seek for help in the event that you have difficulties in paying your mortgage premiums.
When unexpected changes in your monthly income affect your ability to pay your mortgage premiums, it is crucial that you make a quick action. By seeking help from a mortgage professional, you can find solutions to the current financial difficulties you’re facing. Keep in mind that your mortgage professional or lender is willing to establish and maintain a long standing positive relationship between you and your lender. In addition, your mortgage professional must be equipped with the right tools to deal with the financial setbacks that you’re currently facing.
To ensure that you do not experience difficulties in paying your premiums, it is best if you plan to be mortgage free in a shorter period of time. In addition, it is wise to develop a cushion in the event of financial difficulties. There are different ways you can pay your premiums down sooner, create a breathing room in the event of financial difficulties, and save money all at the same time. These include accelerating payments. Increasing your regular payment amount, and taking advantage of pre-payment opportunities such as lump sum on the principal of your mortgage.
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