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A mortgage is a lien on a
property/house that secures a loan and is paid in installments
over a set period of time. The mortgage secures your promise
that you'll repay the money you've borrowed to buy your home.
Mortgages come in many different shapes and sizes, each with its
own advantages and disadvantages. Make sure you select the
mortgage that is right for you, your future plans, and your
financial situation.
Responsibilities that come with a mortgage
Buying a home is a big step and assuming a mortgage for that
home is a big responsibility. Make sure you are ready for a
financial commitment that could last several decades.
Ask yourself:
Are you currently in a financial position to comfortably make
the monthly mortgage payment?
Do you have a financial cushion in case you have sudden
financial difficulties (for example losing your job)?
Are you prepared to take on a long-term financial debt?
Do you know the risks if you cannot pay your mortgage in the
future?
Owning a home has many benefits but it also has
responsibilities. Be sure you are in a position to handle those
responsibilities. If you don't think you are in the position to
take on such a large financial debt, this may not be the time to
buy a home. Instead, focus on getting your affairs in order and
building a financial cushion so you can buy a home in the
future. Taking the time before buying a home to make sure you
are set up for success can alleviate much stress and many
problems later.
Choosing the right mortgage
Once you decide on the mortgage you want, do your homework.
Different lenders offer different rates, points, and fees. Ask
around and compare. Understanding the benefits of different
mortgage offerings can be a complex process. How do you figure
it all out?
Evaluate the pros and cons of a fixed-rate mortgage.
Know all the parts of an adjustable-rate mortgage.
Learn about balloon/reset mortgages.
Understand how a reverse mortgage works.
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