Mortgage Management Tips from the Experts

A lot of people think that a mortgage can be easily managed.

11:06 29 September 2020

However, this is not always the case for everyone. In addition to your mortgage, you will have your own problems to worry about. In cases where you can’t pay your mortgage, the financial damage that will be dealt with you will be irreversible. Thus, a good tip from experts might be helpful to avoid these situations in the first place. 

 

Here are top mortgage management tips from mortgage experts.

 

Keep Your Team of Experts at the Ready

 

The very first tip from mortgage experts is to keep your own team of experts assembled. This will help you sort out your finances. Having your real estate and mortgage team ready before starting to look for a new home is crucial. The competitive nature of the market might have you make quick decisions, some of which you might regret later. You will also have to be pre-approved for a mortgage, as this will help you know what your budget is and how much you can get from the bank. Thus, it would be wise to hire a real estate agent and start searching for home inspectors, as well as real estate lawyers, as they will understand what type of house you want and whether or not you can afford it.

 

Make Available Funds

 

An easy trap that any homebuyer can fall into is purchasing a property based on their max income and not what they can afford based on the monthly cost. A home buyer’s monthly income should be able to afford the interest payments, taxes, heating costs, and principal costs. If they can’t, they’ll have to suffer through living poor. You can indeed get pre-approved according to the max you can afford per month, but this is highly ill-advised for the reasons we’ve just mentioned. A pre-approval should, thus, be obtained based on realistic overall cost, which will allow them to enjoy their lives while making their monthly payments.

 

Be Serious

 

Another factor to consider is showing your real estate agent that you’re serious about the whole thing. You may indeed be overwhelmed with the number of options you’ll have on the market. The process of finding a mortgage solution that will solve all your problems might seem impossible; however, this can be achieved by getting pre-approved for a mortgage. Before you go on a house hunt, you must get a preliminary pre-approval (and make sure that you set your limit within an affordable range) in order to show to your real estate agent that you are quite serious about finding a house. This step can also make real estate agents or sellers give you an advantage over other buyers who hadn’t taken that step yet.

 

Don’t Apply for a Long-Term Mortgage

 

Avoiding long-term mortgages is going to save you a world of worry. Generally speaking, you should go for a shorter-term mortgage, which can be 4 years or less, especially if you expect to move houses before your terms are up. If you don’t want to get penalized for not paying your mortgage, you should look for a short-term mortgage, which, granted, will cost more, or you can get a variable rate mortgage, which can be more forgiving than fixed closed mortgages. There’s no denying that a 5-year fixed-rate mortgage might seem more attractive than other options, but unless they don’t fit with your specific financial situation, you’ll have to pay large prepayment penalties.

 

Automated Transfers and Notifications

 

If you are worried that cheques might get lost along the way in the post, you can use technology, such as automated payments and transfers which can be made by the bank. This will make things much easier to manage and keep you up to date on your payments. There will be minimal chances for mistakes, as you will be getting regular email alerts from the bank. While this isn’t exactly a requirement, it is great to be updated on your funds and understand when your funds are getting low. Automation will make things run easy for years, so make sure that you make use of these tools.

 

Avoid Maxed Allowance

 

As we mentioned earlier, it is of the utmost importance that you avoid qualifying for a maxed allowance. While calculations will include mortgage payments, heat, property taxes, debts, and loans, according to your allowance, it won’t factor other costs into the calculations, like emergency fees, maintenance, lifestyle, and other personal expenses. This you will have to do on your own. Setting the bar up so high could have repercussions in the future and even if you don’t get penalized, you will struggle financially for a very long time until you pay off your mortgage completely. That’s why this aspect should be one of the best things to consider before you look for a good mortgage.

 

Don’t Let the Broker Decide for You

 

The point of working with a broker is to ensure that you see everything. Clarity and transparency should be guaranteed from the very beginning. Therefore, a broker should be able to compare lenders for you on the market and ensure that you’re not paying more than you can afford. A good broker should also guide homebuyers through the process of choosing a mortgage rather than just choosing a mortgage for them. If that’s the case, then you might want to deal with another mortgage broker, who will provide you with a high level of liberty and transparency.

 

Know Your Monthly Budget

 

Finally, you should be aware of what your monthly budget will be. A homebuyer should be able to feel comfortable as they pay their mortgage along with other financial expenses (personal and mortgage-related) to ensure that they will be able to afford extra fees along with their mortgage. For that reason, you should set out a monthly budget from the very beginning to have a clear picture of the situation.

 

Choosing a mortgage that fits your specific financial situation could be a bit tricky, especially if you've got no professional help to back you up. That’s why you should take a look at all of these tips before you choose a mortgage. Make sure that maxing your allowance is completely off the table so that your financial situation will be manageable in the future.