Keeping Your Mortgage in Check

Home ownership is probably one of the best investments that most people will ever make. Over long periods of time, real estate appreciates very well. Certainly there are periods when real estate does very well, such as in the last five years, and there are periods when real estate has not done so well, such as in the early 1980’s, but over long periods of time, a home is a pretty good investment. You don’t just buy a home for the financial aspect though, you buy a home because it will provide you a place for your family to live and grow together. If you buy a house right, it will be a great blessing upon you, but if you are not wise when choosing a home, it will be a curse.

When you get your paycheck every month, make the deposit and write out your bills, how does it feel? Do you ever get the feeling that writing out your mortgage payment is excruciatingly painful? You may have a house and a mortgage that does not fit with your income. There is a possibility that your mortgage is out of line, and someone needs to give you the bad news that it might be time to sell your home.

Keeping Your Mortgage in Check
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Mortgage lenders will actually approve people for loans of about twice the value the individual can actually afford. The general rule of thumb is that mortgage brokers will approve payments which are equivalent to 40 to 50 percent of an individual’s monthly take-home salary. The figure that they use though is far too high. The average person can realistically afford half of those percentages. Otherwise if the percentage of your income which goes to your mortgage payment and everything else associated with it, you won’t have money left over for other important parts of life, such as food, clothing, utilities, and gasoline. You will become very stressed because money is so tight, and can easily get behind on bills.

When making your next home purchase, make sure you are buying a home that you can afford. A good rule of thumb which is promoted by best selling author and financial counselor, Dave Ramsey, states that you should take out a loan of no more than a quarter of your take-home pay. So if you make $3000 a month after taxes, you shouldn’t have a mortgage of more than $750. Ramsey also states that you should get a 15 year fixed rate loan, which will force you to pay off the mortgage as quick as possible. This is definitely a good idea, so this way much more of your payment will actually go toward your home and not toward the bank. Once you make more money, you can probably afford a bigger house, but be sure to keep your mortgage livable. Don’t let it to be too much of your life, or other areas will begin to suffer and you will hurt financially. Your home will no longer be a blessing, and instead it will be a curse.

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