Picking the right mortgage is a tricky and complicated process. It involves carefully considering a number of factors. Unfortunately, with so much information floating around, many people end up losing focus on what comes in the mail every month: the actual mortgage payment. Here are some factors you need consider about the mortgage payment so that your monthly bill is right for you.
1. It Makes Sense
Mortgage payments, and your mortgage in general, should be understandable to you, the person who’s responsible for it. Make sure that everything about your mortgage payment makes sense before you sign off on it. That means having everything you don’t understand explained to your liking. If you are using a mortgage broker or bank who makes you feel like they won’t explain the details, then you should probably move on to someone else. Specific to your payments, be sure you know how much of the monthly payment is applied to the principle, how much is going to fees, and how much is going to interest. This should all be done before you start making payments.
Your mortgage is a large amount of money, but the monthly instalments shouldn’t be so much that you end up bankrupt. When looking at your mortgage payments, be sure that you can afford the amount every month. Usually, it means nothing above 30% of your monthly earnings. This number is a significant amount of your paycheque, but it isn’t so much that, in the event of some issues with your employment, that a single payment will destroy you financially.
Affordability and flexibility are two sides of the same coin. Mortgages today come with many different options that can help you out in times of plenty and times of lean earnings. These can include the option to skip a monthly payment every once in awhile, or the option to put money down straight onto the principle when you’re making more than expected. These types of options can help you in an unsteady job market, and let you pay off more when things are going well.
4. A Payment that Works for You
Above everything else, your mortgage payment should make paying your mortgage easy. Whether that means it comes out on the same day every month, is taken from a specific bank account, or it’s the same amount for the first five years, all of these things need to work for you. Pick a mortgage payment plan that works with you and minimizes your chances of missing payments. That way, you’ll get everything you need without accidentally putting yourself in a bad position.
Mortgages are complicated and so are mortgage payments. When looking at mortgage payments, be sure to get something that works for you. It’s the best way to have a mortgage that brings you a smile instead of a worried look.