Mortgages are long-term commitments that help you finance your living needs. Since most terms can last from fifteen to thirty years, you must be particular about different variables concerning your contract. Otherwise, one minor slipup can turn into an expensive mistake in the future.
Everyone will have a different way of approaching their financial well-being. This is because an individual’s income streams, lifestyle choices, and loan plans will vary from person to person. However, certain practices are universally true, regardless of these differences. If you want to handle your mortgage correctly, you must understand which decisions you should avoid.
Unfortunately, information online or from other people is often inaccurate. While the internet is an excellent source for supplementary information, it’s not always reliable to put your trust in rumors. For this reason, you need to double-check your sources to find facts from fiction.
This article will go over three mortgage myths to help you manage your finances more responsibly.
It’s a common myth that renting a property is generally cheaper than buying a home. While your expenses are relatively more minor, it comes with several disadvantages. Being under a landlord restricts you regarding several actions on your property. Additionally, you may not have an option on the premium your home has.
On the other hand, owning a home gives you a long-term investment you can tap into in the future. For example, you can use a reverse mortgage or refinance your mortgage to pay for other expenses. Paying to gain ownership of real estate also diversifies your assets included in your estate.
The conservative option for traditional mortgages is usually a thirty-year fixed-rate plan. Besides staying consistent throughout the entire repayment term, it also has the slightest changes over time. However, they’re not always the best option for the most savings.
While many are reluctant to utilize adjustable-rate mortgages (ARMs), they’re not too flexible or beyond your control. These loans have interest rate caps; no matter how high or low, market rates will change. For this reason, variable loans may be a more economical option for you.
When incurring debts, the natural response is to pay them off as much as possible. The reason for this is because interest fees are usually tied to longer repayment terms. However, it’s not always ideal to pay off your debt as quickly as you can.
Remember that paying your debt sooner with a more important principle isn’t a guarantee of earlier equity returns. This is why it’s not advisable to top up your principal payment. Instead of paying more into your mortgage every month, you should consider investing your money in other assets. Doing so will help you discover different means to increase your income streams.
Besides clearing up the myths about mortgages, you should also weigh which plans to subscribe to. Keep in mind that home loans come in different shapes and sizes. For this reason, you should look for a mortgage plan that fits your needs without compromising your financial stability.
At Nextafi, we make it easy for our clients to shop and find the right financing solution for their homes. We want our clients to feel at ease, so we provide transparent mortgages to simplify your financial decisions. If you’re ready to refinance or buy a house, contact us at (800) 714-3184 today!