Your home is most likely your biggest investment, and can have a huge impact on your finances throughout your life. It’s important to know how your mortgage will impact you to ensure home ownership brings comfort, not stress.
Learn how to plan for buying your first home, paying off your mortgage, and other important stages in your journey as a homeowner!
Buying A Home, Paying Off Your Mortgage, And Other Tips For Your Homeownership Journey
Your First Mortgage
Buying your first home is a huge, exciting step! There is a great deal you can do at this stage in your life to plan financially for your first home and to set yourself up well for your future. When speaking with your financial advisor and mortgage broker about buying a home, consider:
- Your Credit: Your credit score will have a huge impact on the financing options available to you, so planning early to build up a strong history of paying off your debts is a wise move.
- Monthly Income: Can you afford to pay your mortgage? Generally speaking, your lender will want your payment to be no more than a third of your gross income.You’ll want to consider job stability and your other debt here.
- Saving For A Down Payment: In the past, financial experts advised that a person’s down payment be 20% of the purchase price. While that’s no longer the case, putting more down can help lower your mortgage payment.
If you’re interested in discussing your options for getting a home loan for your first home, reach out to Nordic!
Refinancing Your Home
You’re at a stage in your life where you may be thinking about retiring, minimizing your debt, moving, or other life changes. Refinancing your home can help you put yourself in a stronger financial position to do just that. Refinancing can be advantageous for homeowners in a few key ways:
- Secure A Lower Interest Rate: You have built up a stronger credit history than you may have had when you were younger. If this is the case, refinancing can help you secure a lower interest rate and save money in the long run.
- Shorten Your Loan Term: If you’re interested in paying off your mortgage before entering retirement, or living a debt-free life, securing a shorter loan term by refinancing can help you reach that goal.
It’s important to consider the pros and cons of refinancing your home before taking this step. Speaking with your financial advisor and a mortgage broker can help you understand the situation more thoroughly.
Paying Off Your Mortgage Early
Paying off your mortgage can help you eliminate your debt and in some cases achieve greater financial stability. However, this isn’t the right move for everyone, and it’s important to weigh the benefits as you’re planning to pay off your mortgage.
- Pros Include: Paying your mortgage off early can save you a great deal of money on the interest.
- Cons Include: Your mortgage is tax-deductible, so it may be costing you less than it initially appears to. Furthermore, some loans include a prepayment penalty.
Getting A Reverse Mortgage
A reverse mortgage, when used properly, can help you make your retirement a little easier. If you’re looking at your finances for retirement, a reverse mortgage could offer a few benefits, including:
- Giving your retirement assets more time to grow.
- Receive funds in annuity-style payments, offering you a steady income.
- Provide you with funds when the market is down and your portfolio isn’t performing well.
A reverse mortgage can be powerful when used strategically. Reach out to discuss how you can use one to your advantage.
Your home is an asset that your family will enjoy for years to come, and practicing sound financial planning now can help you ensure you benefit from your mortgage and home! Nordic Home Loans has the resources to help guide you through each stage of your life as a homeowner, allowing you to better enjoy the journey. Ready to keep learning? View our resources page.