12 September 2007
Foreclosure doesn't just happen to people who don't make their mortgage payments. Your homeowner's association (HOA) can take your house or condo if you're not careful. In one case, a disabled California man lost his home in a foreclosure sale because he was $123 behind on his homeowner's dues. The house was worth $280,000. Unfair? Abusive? You bet!Read More »
Mortgage Fundamentals: Finding a Home Loan You Can Live With
By Richard BarringtonNFNS Columnist
Don't be scared off
of your first mortgage by stories about defaults. Keep in mind that the vast
majority of people successfully keep up with their mortgages. With a little
common sense, you can readily find a home loan you can live with for years.
Of course, that's one of the most important things to
remember about a mortgage--you may well be living with it for a long time.
That's all the more reason to take a little care in planning what kind of home
loan will fit into your comfort zone.
Give Your Budget a
Trial Run
There are all kinds of rules of thumb about how much of your
income should go toward a mortgage, but ultimately every budget is different.
Fortunately, you can take a little trial run before you
apply for your home loan. You'll need to save up some money in advance anyway
for a down payment and closing costs, so try setting aside an amount equivalent
to a mortgage payment every month.
Use a mortgage calculator to find out what a monthly payment
would be on a house in your target price range. Then spend at least six months
putting that amount into savings every month. If you can do this without fail
for six months, you'll have demonstrated that you can make that level of mortgage
payment--and you'll have added to the pot you have available for a down payment
and closing costs.
Planning Helps You Rest Easy
That down payment and those closing costs are just the
beginning of what you have at stake when you take out a home loan. Your credit
rating and lifestyle also depend on making those mortgage payments. There are
other fundamentals worth exploring, but for starters, this little budget
exercise will help you find out how ready you are to meet this obligation.
About the Author:
About the Author
Richard Barrington is a freelance writer and novelist who previously spent over twenty years as an investment industry executive.