Staying current on your mortgage payments is incredibly important for maintaining your financial stability and taking care of your overall situation. Whether you already have a mortgage or you’re getting ready to buy a home this year, you should spend some time thinking carefully about how you’re going to deal with the mortgage moving forward. With house prices going up and more and more people buying homes and taking out mortgages, the stakes are high for housing decisions.
Here are a few tips and helpful ideas to keep in mind:
Be Strategic with Your Debt
Mortgages are often on the lower end in terms of interest rates, and can be very manageable and stable compared to other debts you may be carrying. Interest rates are very likely to go up in 2018, and when the Federal Reserve decides to push interest rates up, most of your debts with variable interest rates will follow.
Focus this year on paying down any of those sorts of debts you may have attached to a credit card or a new car. Your mortgage can wait, but those other debts are going to get even more expensive if you’re not careful.
Refinancing Is Always an Option
And, considering those rising interesting rates, now is also the time to make a change if you’ve been enjoying an adjustable-rate mortgage. Interest rates have stayed low over the last several years, but they’re not going to stay that way. The chances are very high that those mortgage rates are going to go up quite a bit in the near future, and even a small increase in your mortgage rate is going to make a big difference for your finances over time. You’re going to feel it.
To avoid having to deal with those consequences later, take advantage of the opportunity now and refinance into a fixed-rate mortgage. Now is a good time to make that change before rates really start picking up.
If Buying, Finance Ahead of Time
Unfortunately, the housing market today very clearly favors the sellers. Prices are going up and it seems like fewer options are available every day. As a new home-buyer it’s going to be a big advantage for you if you’ve gone through the work of setting up your mortgage and financing your home purchase before you go in looking to find the house and make the purchase itself.
If at all possible, you as a home-buyer want to get pre-approved and settle on the mortgage first, and then meet with the home-seller. That may give you leverage over buyers, and, frankly, it will make it easier for you to jump on the house you want when you find it before it gets snatched up by someone else.
Be Realistic with Yourself
Managing a mortgage is challenging, and it has big consequences for your family and your financial well-being in the present and future. This means you have to be able to be realistic about your finances. If you can tell already the debt load of this year will be extra-challenging, given the changing market conditions and rising rates, take steps now to curtail your spending and try to cut costs.
Being realistic is also a necessity for new buyers stepping into the housing market and starting their mortgage fresh. Be aware of the disadvantages you face as a home-buyer in this market, and be careful about the expectations you set. The perfect house that checks all your boxes may or may not exist, but if it does there’s no guarantee it hasn’t been bought already. You have to know beforehand what you are and aren’t willing to compromise on, and you have to be ready to commit without hesitation when the right house does come along.