Carefully Chosing Your First Home Mortgage

It’s a pretty exciting time, when you made the decision to make your first home purchase. I know it was for me. It’s certainly one of the major milestones in your life. It can also be a little bit scary as well. It’s not so much owning your own home that’s frightening, it’s that dreaded first home mortgage that makes it seem so scary. But, information is power, so let’s consider a few little tips to tame that mortgage down to size.

First and foremost, it’s a good idea to keep your non-mortgage debts to a minimum. That includes credit cards, car loans, and lines of credit. The less debt that you have going into a mortgage, the less intimidating the whole idea of having a mortgage will seem. Not to mention, your chances of getting a reasonable mortgage will improve. The other thing to keep in mind, with non-mortgage type debt’s, is the interest-rate. These rates are usually much higher than mortgage rates. You’ll be better off, to defer incurring these debts, and taking out a slightly larger mortgage.

One of the big questions you want answered when you talk to mortgage broker, is how much of a mortgage you’re able to handle. You need to be careful here, not to get in too far over your head. The other thing to try and do here, is bring as big a down payment as possible. Especially these days. This will decrease your monthly payments, increase your equity, and save you money in the long run.

It’s important to consider, your monthly payments. This is the expense your going to have to deal with every month. As a rule of thumb, your monthly payments shouldn’t exceed more than 25% of your gross monthly income. That is, assuming you want to eat :-) There will be extra expenses, even unforeseen ones. As exciting as it can be to own your first home, you still need to keep the big picture in mind.

At first, finances may seem tight. If you’re like most people, you bought the most house you can. Over the years, things will get easier. As you get better jobs and earn more money, that mortgage payment will seem smaller and smaller. As housing prices grow, your equity in your home grows as well. Eventually there will come a time, when your mortgage payments are actually less than the going rate for rentals on similar properties. Owning your own home is a great feeling, but it gets even better, as your mortgage decreases. It’s a feeling of security that’s hard to beat.