The right mortgage for each season of life
Getting a mortgage is more than a one-time event. It’s an important ongoing part of your lifelong financial strategy, and it should change and evolve as you and your household’s needs, goals and circumstances change and evolve. Whether you want the smallest mortgage payment available, to be debt free as soon as possible, to minimize the cost of your loan or to have the most cash available to save, spend or invest elsewhere, each may require a different mortgage solution. Here are some guidelines to consider at each stage of life when deciding what direction to take with your mortgage.
If you’re a first-time homebuyer with limited income or savings, a mortgage with small payments is likely most important to you. The popular 30-year fixed-rate mortgage is often the best choice for a low monthly payment since the costs are spread out over three decades. If you have limited cash available, you may also want to make a low down payment, such as 5%, 3% or even 0% down if available.
As your household matures and its income earners advance in their careers, different mortgage types may become more advantageous. With more financial resources available, you may want a mortgage with a bigger monthly payment, such as a 15-year loan rather than a 30-year one, so you can save on interest costs and build equity faster. If you plan to move or pay off your home within five, seven or 10 years, an adjustable-rate mortgage may offer even more interest savings. Lastly, if you’ve built up equity in your home, you may be able to take some out with a cash-out refinance to pay for a renovation, college tuition, debt consolidation or other big expense.
It may be harder to obtain a new mortgage after you retire and have no earned income, so pre-retirement is an important time to decide on a mortgage strategy for your golden years. You may wish to increase your payments to pay off your loan faster, take equity out of your home as cash or you even halt your mortgage payments entirely with a reverse mortgage.
By choosing the right mortgage solutions as you move through life, you can help ensure a secure and prosperous lifestyle for yourself and those you love. Get in touch for a free mortgage consultation to examine your current situation and mortgage and see if you could benefit from a change in strategy.