Tips to Keep Your Mortgage Payments Affordable

As you shop for a home, you also are shopping for a mortgage that will make homeownership affordable over the years to come. Let’s go over some recommendations that can help you keep your mortgage payments within your budget over the lifetime of your mortgage.

1. Pick the right type of home loan and mortgage rate format for your needs. There are multiple types of home loans, including conventional loans, jumbo loans, FHA loans and VA loans. Identifying the type of mortgage that is an ideal fit for your financial scenario can help you with qualification, rates and features. Most homebuyers should consider a fixed mortgage rate, which stays the same for the lifetime of the mortgage. An adjustable mortgage rate is sometimes less expensive during the introductory period. But after the introductory period expires, this type of mortgage rate can increase or decrease depending on what is happening with market rates. If you are confident you will only spend a few years in your home, an adjustable mortgage rate might be a sensible option. But if you plan to inhabit the home long term, then you probably want to go with a fixed rate to keep your mortgage payments affordable and predictable. If interest rates decrease in the future, or if your qualifications improve, you can refinance your fixed rate mortgage later.
2. Accurately assess how much home you can afford. Another tip for long term home affordability is to make sure when you choose a home, you are truly shopping within your budget. You will get an initial idea what your budget is during the mortgage pre-approval process. But you may not want to borrow up to the maximum amount that you are likely to be approved for. You should base the amount you are willing to spend on a home on concrete financial factors. Think about your long term earnings potential, the stability of your job and industry, your daily expenses, inflation, taxes, and everything else that forms a comprehensive financial picture of your life. After you calculate how much home you think you can afford, consider buying a slightly more modest home to give yourself a little extra buffer.
3. Make a larger down payment if you can. The larger the percentage of your mortgage you pay upfront, the less will remain due over the lifetime of the loan. That means that for the same mortgage term, your monthly payments due will be smaller if you had a larger down payment. Also, when you make a larger down payment, all things being equal, you may qualify for a more affordable interest rate since you have reduced the risk the lender is taking on. This, too, can help keep your mortgage affordable over the long run.
4. Raise your credit score before you apply. When you apply for a mortgage, your credit score will be assessed. It will be one of the primary things that determines what mortgage rates you qualify for. The higher your credit score, the more affordable your rates may be. So, another thing you can do before you apply for a mortgage is see if you can increase your credit score. Some ways to do this could include paying off a small debt, reducing your credit utilization, and correcting any errors you find in your credit reports. There may be other ways you can boost your score quickly as well.
5. Use a local mortgage broker. Applying for a mortgage through a local mortgage broker instead of through a direct lender can help homebuyers save money. The broker can get rate quotes from a large network of lenders, bringing you the most competitive offers. Plus, the broker may be able to access rates that are not advertised to the general public. Mortgage brokers often can connect you with more types of home loans than direct lenders can as well.
6. Take advantage of the Mortgage Credit Certificate program. One more way you might be able to save money if you are a first time homebuyer or a veteran is to apply for a Mortgage Credit Certificate (MCC) program. Florida State Mortgage Group can assist you with your MCC program application. If you qualify for an MCC program, you can claim up to 50% of the annual interest you pay on your mortgage each year. The amount you can claim in total every year cannot exceed $2,000. But getting $2,000 back in your budget each year can be a big deal. Plus, qualifying for an MCC program may help you afford more home if that is your preference.

Buy a Home or Refinance in Florida

Florida State Mortgage Group is based in Fort Lauderdale. We can help you buy a home or refinance anywhere in the state. During your consultation, we can discuss ways to make homeownership affordable and help you identify a suitable type of home loan. Or, if you already own a home, we can help you figure out if a refinance is right for you. To get started, please give us a call at (954) 359-3000 to schedule your mortgage consultation.