June 8th, 2017 5:29 AM by Jackie A. Graves, President
If you are in the market for a
new home – or looking to refinance your current mortgage – then here are 4 tips
to ace your mortgage in 2017:
1. Live within your means
a home is an exciting life event, and your home is likely your largest asset.
when purchasing a new home, make sure that you are not spending your life
you own a home, there are plenty of other expenses for which you need to account:
utilities, home maintenance, home improvements, insurance and other costs. In
addition to your home, you have other life costs.
while your home can appreciate in value over time, your home is not a liquid
asset – meaning it cannot easily be converted to cash. You can’t decide to buy
your home in the morning and sell it in the afternoon.
this in mind when you choose your loan amount and interest rate.
Take Action: For a good night
sleep in your new home, have a cash cushion in your savings account as well as
an emergency fund.
2. Consider the best loan options
for your financial situation
it comes to a new mortgage or
refinancing your current mortgage, you have several options (among others) from
which to choose.
the loan option that makes most sense for your personal financial situation.
is no universal rule for every homeowner.
financial profile is unique. That means that your financial situation is
specific to you.
example, a married couple with children may prefer a 30-year fixed mortgage
because they expect to be in the same home for the long-term, and want the
peace of mind to pay the same interest rate (regardless of interest rate changes).
newlywed couple without children may prefer a shorter-term, adjustable-rate
mortgage – which initially has a lower, fixed interest rate – because they
expect to sell their home (and buy a larger one to make room for their
children) before the interest rate converts to a variable interest rate.
Take Action: Don’t necessarily
choose what your neighbor does or what your grandparents did. You need to
decide what is best for your life circumstances and financial goals.
3. Make sure your credit report
you apply to borrow or refinance a mortgage, expect that your credit report
will be checked.
lender will review, among other factors, your financial history, income and
other debt obligations.
you have a lower credit score or poor financial track record, you can expect to
pay a higher interest rate on your mortgage because lenders view you as a
Federal Trade Commission found that 5% of consumers had one or more
errors on their credit report.
are three major credit bureaus: Experian, Equifax and TransUnion.
credit bureau collects information on your credit history and develops a credit
score that lenders use to assess your riskiness as a borrower.
federal law, you are entitled to view your credit report every 12 months from
each credit bureau. Since each credit bureau may have different information
about your credit history, your credit score may vary across the three lenders.
For a free copy of your credit
report, you can visit Annualcreditreport.com.
you find an error, you should report it to the credit bureau immediately so
that it can be corrected. Your credit score will not improve over night, but
the sooner you take action, the better.
Take action: Want to boost your
credit score? Check out five ways improve your your credit score.
4. Evaluate all your debt before
racing to pay off your mortgage
may sound like common sense to pay off your debt as quickly as possible.
focus less on the type of debt and more on the underlying loan terms.
student loans, always pay at least your minimum mortgage payment.
skip any mortgage payments because the penalties can be severe.
saving for retirement as early as financially possible by contributing to your
401(k). Benefit from the power of compounding. Take advantage of your company
you apply any excess funds to pay down your mortgage or invest more in your
the interest rate on your mortgage to the returns you can earn by investing
current interest rates and the historical return of the stock market, for
example, you can typically earn a higher return by investing in a retirement
account such as an IRA or 401(k) than paying off your mortgage with additional
Take Action: Look at your entire
financial picture. Balance your debt obligations with your investment goals.
By Zack Friedman - To view the original
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