Mortgage: Assessing the Risks

A home mortgage is a tremendous financial investment. Following are three things to take into consideration before you sign on the dotted line.

Mortgage Advice: Type of Mortgage

The type of home mortgage you get can mean being able to retire early (or not); being able to pay for your child’s university education (or not); or taking regular vacations (or not).

In short, a home mortgage is probably the largest monthly bill you will have for 20, 25 or 30 years to come. So, take some time to consider the type of mortgage that will be best for you – not just for the immediate future, but for your long-term financial goals and other life ambitions as well.

Probably one of the most crucial decisions borrowers make is whether to get an open home mortgage or a closed home mortgage.

An Open Mortgage can be paid off at any time without penalties. You can also make additional payments without penalties. Open Mortgage terms range from 6 months to 5 years and can have variable or fixed interest rates. There will still be a minor fee to discharge the mortgage when paying out the mortgage or transferring to another lender. Call now to see if an open mortgage is ideal for you!

Closed Mortgages have lower interest rates then Open Mortgages. You cannot pay out a Closed Mortgage early without a penalty, but are still allowed to pre-pay up to 20% of your original principle balance each year with most lenders. Closed Mortgage terms can range from 6 months to more than 10 years. Call now to find out which term will best suit you.

A good mortgage counselor will be able to help you select the home mortgage option that’s best for you.

Mortgage Advice: Impact on Finances

As a home mortgage is probably going to be your largest financial obligation for years to come, you want to assess the impact it’s going to have on your finances.

Many underestimate the true cost of owning a home. When the heat goes out in the winter, unlike apartment living, you can’t call the super!

When you own a home, you are responsible for all repairs – and this can have a huge impact on your finances from month to month.

While you may be able to afford the monthly home mortgage payment, most experts advise that you give yourself a financial cushion for emergency repairs ¬ because when you least expect it, the water heater will go out, the stove will stop working and the refrigerator will go on the blink.

These are repairs that can easily run into the hundreds or thousands of dollars – because they usually mean calling in repair professionals.

Mortgage Advice: Impact on Lifestyle

For many home buyers, getting a home mortgage means a sacrifice in lifestyle.

As mentioned above, owning a home is usually more expensive than many are prepared for – some experts say as much as 25% more expensive on a month to month basis!

If you currently pay $1,000 month in rent, can you imagine your rent being raised by an extra $250? Could your existing budget absorb the hit?

You want to enjoy your home, not feel financially strangled by it. So, eliminate these “risks” before taking out a home mortgage.