When financing a home, make sure you’re prepared to deal with any challenges that come up. These can include a loss of income, increased expenses, or rising interest rates. The following tips can ensure you’re financially stable through many ups and downs.
• Choose a smaller mortgage. Get a smaller mortgage than the maximum amount you can afford. This will keep your monthly housing costs lower and allow you to deal with sudden changes in your income or expenses.
• Evaluate the impact of higher interest rates on monthly payments. With a variable rate mortgage, even a small increase in interest rates could have a big impact on your monthly costs. Taking the time now to learn how changing rates could affect you may help you avoid financial problems in the future.
• Plan to be mortgage-free sooner. You can pay down your mortgage faster by making your payments weekly or every two weeks. You can also increase the amount of your regular payment or make additional lump sum payments if your mortgage allows it. Talk to your lender to see all possible options.
• Be proactive and ask for help if you need it. If unexpected challenges affect your ability to make mortgage payments, contact your lender or broker as soon as possible. They can work with you to find a solution to any temporary financial setbacks.