How to Be Prepared for Mortgage Rate Increases
Mortgage rates are rising, making it difficult for new home buyers to afford the home repayments. Here are some tips to help new homeowners keep their mortgage payments within their budget.
Understanding the Mortgage Types
The first and most important thing you must understand is the mortgage type. If you are willing to go with a variable mortgage, it means your interest rate will keep floating, but if you are dealing with a fixed-rate mortgage, it means that your mortgage interest rates will stay the same till the end of the mortgage. Both types have their pros and cons.
Offer a Higher Down Payment
A low down payment home loan can put homeownership within your reach, and you can keep more of your cash in reserves. But if rising mortgage rates result in a monthly payment that’s higher than what you’d like to pay, a larger down payment can help offset the effects of the higher rate.
Set a Budget
One of the significant reasons why budgeting is essential is that it can help you achieve your financial goals. These plans can be anything – you may be budgeting for a special event or keeping a deposit on a home. And even if you don’t set any financial goals, budgeting is still valuable. This is because it allows you to build up a better understanding of your finances. Whatever the goal of your budget, you’ll always understand how much money you have and how much you can afford to spend, enabling you to make better financial decisions.
Budgeting is the most effective way to handle your money. Although it may seem daunting initially, budgeting has many advantages regardless of your financial circumstances.
Choose Conventional Mortgages Over Government-Backed Mortgage Loans
Most people prefer Government-backed mortgage loans to conventional mortgage loans because Government-backed mortgage loans require a low down payment. Still, these loans can be expensive as you will be paying mortgage insurance. Therefore you should always prefer conventional mortgage loans over government-backed loans.
Get Expert Advice
At LeapFinancial, we have a vast knowledge of the mortgages available from different lenders. We’re here to help make the home buying process as stress-free and enjoyable as possible. Whether you’re a first-time homebuyer or looking to expand your real estate portfolio, we’re here to help you every step. Feel free to contact our team today to help get you started!