Canadian Finance Blog

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Acquiring an Affordable Mortgage Posted: 25 Jul 2011 02:00 AM PDT The trick to staying in a home is being able to afford its mortgage to start with.  Here are a few tips that you can use to acquire an affordable mortgage for you and your family. Buy a Home that you can Afford According to Realtor, one of the mistakes that a lot of people made during the housing crisis was to buy way more home than they could easily afford. Banks allowed customers to take out home loans that were well beyond their means. Homeowners quickly fell behind on their payments because those amounts far surpassed their monthly incomes. You can avoid making this mistake by keeping your mortgage payment to no more than 25% of your monthly income. That way, your mortgage payment will be something you can easily make without throwing the rest of your finances into disarray. Base your Purchase on the Home's Current Value Way too many people bought homes expecting them to appreciate year after year forever. They depended on the equity in their home to give them the money that they needed to pay their other bills. Although a home may increase in price, you should never count on using your equity for bill management. The equity in your home is much nicer if its a bonus instead of a necessity. Refinance your Existing Mortgage If you are already in your home and have a high interest rate, there are steps that you can take to make things easier for you. If you aren't upside down, you can take advantage of the currently low interest rates and refinance your existing home loan. Reducing the interest rate of a mortgage leads to lower payments plus you will be paying more towards principle and less towards interest. Build Up Savings The current economy demonstrates just how important it is for every homeowner to have an emergency savings account. You never know when your own employment situation will get rocky. You can protect your finances by saving up at least 6 months worth of monthly expenses in a savings account. This way you can keep paying the mortgage and protect your most expensive investment no matter what happens in the short term. What other ways can you think of to acquire an affordable mortgage? Author Bio: John Anderton is an avid personal finance writer & observer. He writes regularly about personal finance, real estate and home financing in particular. Related Posts: Accelerated Bi-Weekly Mortgage Payments How Much Mortgage Can I Afford? Increasing Your Mortgage Payment Acquiring an Affordable Mortgage originally appeared on Canadian Finance Blog on July 25, 2011.

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