When shopping for a mortgage, you should ask yourself several questions.
The first is, what can you afford? then how long will you stay in this house before selling or refinancing for perhaps an addition or renovation, and then, how quickly can you pay your mortgage in full?
The Wall Street Journal reported that: Mortgage rates dropped below 4 percent for the first time since November, providing more kindling to an already hot housing market as the crucial spring selling season gets under way,. The average rate on a 30-year fixed-rate mortgage dropped to 3.97 percent for the week ended April 20, from 4.08 percent a week earlier and 4.3 percent in mid-March, according to data released Thursday by mortgage company Freddie Mac compared to 2016, mortgage rates, which hovered just above 3.5 percent for the 30-year fixed-rate mortgage.” Don’t’ just get locked into a conventional 30 year fixed mortgage, examine each alternative with your financial planner to determine which loan makes sense for you.
Having a mortgage interest deduction helps the bottom line on your tax returns, but it also costs you, dollar for dollar, to pay each month. Residential mortgages are designed to be front loaded with interest, you only start paying principle years after the mortgage has begun, therefore, don’t’ worry about the mortgage interest deduction, if you are not refinancing or selling within the first 2-3 years, and you can pay the principle down, do it as quickly as you can, leaving room for a reserve of 6-10 months of your monthly bills, in the event that you lose your job or some unforeseen event occurs.
The contents of this article are not to be construed as legal advice or an obligation to act for any particular person. The opinions expressed are those of the author.