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Buying a house was extremely intimidating for me. Getting a mortgage is a big decision! I mean I would be owing THOUSANDS OF DOLLARS… That’s kind of crazy! But I got it figured out, and now we have a house.
It was one of those moments that you think to yourself, “Wow, NOW I’m officially a grown-up…” You know, because marriage, kids, a degree, and a full-time “grown up” job didn’t do it. I will probably keep having those moments for the rest of my life.
Getting a Mortgage-How Much?
When it comes time to invest in a family home, there’s a temptation to go for the largest mortgage. There are some fantastic properties at the top of the housing market, after all. As such, you may be tempted to forever go for the highest offer your realtor puts on the table. But, doing so might not serve your family as well as you think.
The fact is that places can vary a great deal in price when they’re on the housing market. In any area, you can bag a bargain if you know where to look. Doing so would undoubtedly mean that you could accept a lower mortgage offer. Which, if you hadn’t realized, is something you should always aim to do.
Remember that a mortgage is a loan. No one would borrow more money than they need to at any other time. So, why make that mistake with your mortgage? Despite what you believe, a smaller mortgage may actually work out better for your family. Keep reading to find out why.
You’ll always have money spare for emergencies
If you accept an excessive mortgage, your monthly payments will be high, which could leave you out of pocket not long after payday. That’s bad news when you consider that every family can benefit from extra cash for emergencies. Whether it’s a broken boiler or a new pair of new school shoes, you need to have spare to weather these storms.
A smaller house payment means that you could be setting money aside for these situations. You also have to consider that with many long-term loans, the payment goes up after time. If you are on a graduated payment plan, then every couple of years your payment gets increased.
You’ll be able to afford to get the house how you want it
Consider, too, that opting for a top-end mortgage is going to drain any savings. In some ways, a large deposit is part of house buying. But, you may find that holding some money back can benefit you.
While it will mean a smaller mortgage, it ensures you have funds to decorate and renovate when you move in. That’s essential for making this new house a home. Even the fanciest property isn’t going to make you feel settled if it’s months before you can change the decor.
When buying a house, have money set aside for the down payment but also make sure you have a chunk set aside for all of the changes you will want to make to make the place your own.
Your house will become a nest egg much sooner
When we have kids, most of us are keen on the idea of buying a house so we can provide our little ones a nest egg. This is your children’s inheritance in a way. At least, it will be if you clear your mortgage well before you leave the house to them. If you take out the most substantial mortgage, though, the interest alone could eat all the funds from the house sale, leaving your kids with nothing.
By comparison, a small mortgage should be easy enough to clear in no more than twenty-five years. That means you can leave your house to your children, and rest easy they’ll get every penny.
These are great points to consider, especially the long term effects of how much you owe. There are always deals for patient buyers that stick to their plan Ü
These are really important things to consider. A mortgage is something that will be with you, long after your kids head to college. I think sometimes people just have enough money for the mortgage but don’t realize that with a house comes other needs!