Homeownership is a dream of many people. However, this dream comes with the cold, hard reality of a monthly mortgage payment, including interest. Keeping mortgage rates manageable is a key factor in remaining financially stable after buying a new home. Here is how you can do just that.
- Increase Your Down Payment
The standard down payment for a home is usually 20% of the total cost, but in some cases, you may be able to provide much less than that. However, there are very good arguments for providing as large a down payment as you can manage. The bigger down payment, the less interest you’ll need to pay. Monthly payments will also be smaller when down payments are more substantial.
- Decrease the Loan Term
Many home loans come with a 30-year term. While this provides ample time for you to pay off your loan, it can also greatly increase costs. If possible, consider a shorter term, such as 10 or 15 years. Not only will you have your home paid off much quicker, you’ll also end up paying a lot less.
- Improve Your Credit Score
While there is no quick-fix to a fair or poor credit score, if you’re planning to buy a home sometime in the future you should take steps to improve your rating now. Your score is based on a number of factors, including the balance on your credit cards. Keep this figure to no more than 30% of the total credit limit, while also making sure you pay your bills on time each month.
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