It is no secret that owning a house is one of the life goals most Americans have and at this day and age, this usually means mortgage payment. There are not a lot of people who can purchase a house outright with existing money without having to borrow for it. This is because majority of people do not have enough funds to pay for a house and the fact that homes costs thousands of dollars also makes it a challenging endeavour for average Americans to own a house.
This holds true even as Freddiemac.mwnewsroom.com shares that the average 30-year mortgage rate for fixed loans went down .08% from 3.56% to 3.48% last week. This was even lower from the 4.08% rate from 12 months ago. The rate is lower and is good news for people who are considering to buy a house but that does not change the fact the property prices are still a big investment.
This is why buying a house is one of the biggest decisions you will ever make in your life. It takes time to even save up for the downpayment on the house and a lot longer time to pay off the entire amount. Most loans take up to three decades to pay off and that is if there are no hitches with the payment. That is enough time for kids to grow up, go to college and build families of their own.
With this in mind, it is no question that this is not only the biggest but one of the most important life decisions you will ever make. It could be high up with getting married and having kids. The amount and the time you have to put in will be with you and your family for a long time. That is why it is important you carefully study the effects mortgage payment has on your budget.
There are ways to expedite your pay off when you have already making payments but even before you get there, you need to get a good handle on the expense. One of the biggest challenges when looking at mortgage loans is that apart from fitting it in with your present budget, you have to study how it will affect future finances.
Mortgage payment insights to help you keep your house
As you make payments on your house, here are few things to keep in mind to help you take control of the expense.
- Be sure that you can afford your mortgage. Nerdwallet.com shares that the average mortgage loan amount held by consumers is about $168,614. This is one big amount and should not be taken lightly. It is a crucial step for consumers to be able to determine if they can afford the monthly payment in the first place. They should not go into the loan when they will be miserable from one month to the next. Look for a property that is just right for what you need as a family and what you can monthly with your earnings.
- Try having extra payments for your house. When you already have the mortgage loan, one thing you can do to take control of your payments is to make extra payments. It can be extra amounts every month or paying in advance. You can pay for principal only or as an extra monthly payment. The difference between the two depends on what your priorities are. If you are going away on a long trip, it would be better to pay extra months on your mortgage. This helps you enjoy your vacation without worrying about missing payments on your house. On the other hand, if you have extra funds you can use for the house, extra principal payments can be explored. This helps you lower down your principal and save interest in the process.
- Be vigilant with insurance and tax payments. There are some lenders that would require home buyers to pt in an escrow account to cover payment for taxes and insurance on the house. This can make your life as a homeowner convenient because you are putting aside a monthly amount for a big annual payment. This also ensures that you get to pay for your taxes and insurance every year. But this amount rarely stays the same and can go up and down from year to year. The reason for this is that the premium amount on insurance changes as well as the taxes assessed on the property. It is up to you to talk to your insurance company to understand and manage your premium payments. You can also talk to your county to try and get a handle on your tax payments. Doing these can help you manage your expectations with your tax and insurance payments.
- Look for ways to increase your income. Lower down your expenses as well such as living a frugal life. These can help you focus your attention to your house payments and be on track in paying it off on time. You can check how you can get an increase in your day job or complement your income with cash-generating hobbies such as photography or even baking. The more income you bring in, the better you can manage your mortgage payment.
- Check refinancing rates. This is applicable if your credit score has gone up from the time you took out your mortgage loan. You can get a better interest rate which often leads to a lower monthly payment. You just have to weigh this with the fact that you are again starting your loan repayment term in the beginning.
- Monetize unutilised spaces. One way to help you take control of your mortgage payment is to make use of unused space around your house. You can rent out an extra room or that garage that you have no use for. The extra money you get can be used to make sure that you are on time with your payments on the house.
Getting into mortgage trouble
Now that you have an idea on some of the things you need to do to help you get things in order, here are some of the most common problems that homeowners go through. The sooner you understand some of these problems, the better you can prepare for them.
- Missing payments on the house. You need to make your debt payments and that includes your mortgage loan. Sadly, there are some consumers who are not able to make their house payment for a number of reasons. There are those that have legitimate reasons like getting sick or being away out of town on business.But even these instances should not be reason eough to make you miss your payments. You can schedule your payments ahead of time or talk to your lender about these situations.
- Not taking care of the property. Much like your car, you need to take care of your house and continue to take care of it so you can use it for a long time. You need to regularly bring your car into maintenance to make sure you get to use it for a long time. The same with your house because you need to take care of it. Fix what needs to be fixed and look at preventable repairs so you can enjoy the house for a longer time. It also lowers your upkeep and repair costs for your house.
- Adding more expenses every month. One of the worst things you can do when managing your house payments is adding more your debt to your budget. It can be maxing out your card or buying unnecessary home equipments when the ones you have are still in perfect condition.
There are ways to take control of your mortgage payment so you get to keep the house and pay it off in time. This is one of the biggest and most important decisions you will ever in your life and it will be a good idea that you are on top of your payments until you send in that last pay off cheque.