You’re starting to look for a mortgage or want to confirm you made a good decision.
To make the most of your mortgage, you need to decide what works for you and then shop around to find it. Ask yourself these questions to get started:
- “What’s more important—a bigger home with a larger mortgage or more financial flexibility?”
- “How much do we want to budget for all the monthly housing costs, including repairs, furniture, and new appliances?”
- “What will a mortgage payment mean for other financial goals?”
Make the Most of your Mortgage
1. Define what affordable means to you.
Your lender will consider your ability to repay a mortgage loan, not whether you’ll be comfortable paying it. Think about your whole financial picture and whether you want to take on the costs of owning a home, such as appliances, repairs, or maintenance.
2. Understand your Credit
Your credit history and the way you manage your finances can significantly affect the interest rate and fees you pay. To improve your credit standing and get the best loan terms, pay your bills on time and reduce the amount of debt you owe. About 35% of your credit scores are based on whether or not you pay your bills on time. About 30% of your credit scores are based on how much debt you owe. That’s why you may want to consider paying down some of your debts.
3. Pick the mortgage type that works for you.
Fixed-rate mortgages offer the certainty of a constant monthly payment over the life of your loan. Adjustable-rate mortgages (ARMs) start out with lower monthly payments than fixed-rate loans, but your interest rate and monthly payment can increase over time.
