Sunday, 21 July 2013
Stress test your mortgage for peace of mind! Avoid being exposed to growing rates!
First time home buyers figure mortgage interest rates will hold at the same low level for another few years. Will they?
In any case when your mortgage comes up for renewal and a new much higher interest rate will kick in, are your certain you will be able to pay the higher mortgage payment? There is 25% chance you will have trouble coming to you and it will not going to be pretty.
Minimizing the risk of a shocker and the event when you will not be able to afford the new high mortgage payment, you must foresee your situation and act on it now by getting some professional advice to get a plan to avoid huge problems later. Not all of us have a budget and the earning to pull extra hundreds of dollars to be able to pay for the mortgage.
The mortgage industry’s rule of thumb is that total housing costs like: mortgage payments, heating, condo fees if applicable, property taxes) should not cost you more than one-third 32% of your gross income.
Unless you have other way to draw funds from elsewhere, going above this threshold can turn your budget to a negative territory. Especially true if you have other big monthly obligation.
Besides you buy a cheaper home and or put more down payment at purchase, you can:
a. Get a long term fixed mortgage product so you can budget
b. Pay higher payments when you can afford it
c. Pay down other debts, so you can afford higher mortgage payments
d. Invest into high earning saving accounts to tap in when needed
e. Choose a mortgage product with ability to rewrite amortization
f. Get VIR (Variable Interest Rate ) with a cap rate to be able to lock it in
g. Utilize the by-weekly payment option, save years
…and on and on… There are many options and tricks what you will not get out of your Branch Mortgage officer, however an experienced mortgage broker will be able to advise you on, help you to work up a plan and to minimize your risk of hardship. How to find a good mortgage broker? Let start with if a mortgage broker committed to give you a FREE Consultation session to assess your need and circumstances, it is a show of good intend and a start of a great relationship. Don’t forget it is money and it can make or break You. Until we meet:
Zoltan M. Padar