What You Should Know Before You Apply for Mortgages in Westport

Perhaps you’ve heard that right now the housing market is a buyer’s market. The fact is that there are more homes owned by banks than the banks can sell. That means you can buy a home for a very low price compared to where prices were six years ago. The market is starting to improve, which means prices are coming up again, so it may be that the window for buying cheap is shortening. But before you rush out to buy a home, you’ll need to think about mortgages and how you will finance your new Westport home.

Fixed or Variable Interest Rates

The amount of money you borrow is going to grow over time and at the end of your mortgage term you will have paid much more than the original amount. That’s because there’s no way to borrow money without paying interest on your mortgage. Most people think they should go for the lowest interest rate available, which makes sense in general. Unfortunately, the best interest rates are often variable interest rates, and there is nothing certain about a variable interest rate. In fact, one of the main reasons that so many houses were foreclosed on over the past six years is that people had variable interest rates on their mortgages.

When the housing market collapsed, interest rates skyrocketed. That meant that monthly mortgage payments skyrocketed, and many people simply couldn’t afford their payments anymore. While that was a very special set of circumstances, you are better off with an interest rate you can predict when it comes to making your mortgage payments.

Your Own Monthly Budget

Another important consideration will be your monthly budget. Before you walk into a bank to ask about mortgages, do a household budget. That simply means that you should write down all of your monthly expenses, every bill, your rent, credit card bills, student loan payments, and the amount of money you spend on groceries, eating out, and other miscellaneous expenses. Then you write down your income and see how it all evens out. Include any savings you are doing or savings you would like to do in the future.

If you make more money than you spend, you’re doing great. Now the question is, can you afford monthly mortgage payments? You won’t be paying rent anymore, so the amount can safely be the amount you pay in rent. Less would be better, but can you afford a bit more? These questions are critical if you’re going to be successful at paying your mortgage in Westport.

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