The current pandemic has created uncertainty for many people around the world. Whether you’ve needed to care for a loved one or lost your job because of coronavirus, most have taken a hit. These events can disrupt specific goals and plans, especially those that require financial stability to become a reality.
If you need to afford a new mortgage or save up for payments, here are a few tips and tricks.
1. Prepare a Budget
It’s essential to assess your finances before a significant purchase. You may need to consider a new way to earn an income so that you can afford this expense without any problems. It’s never easy to take on additional employment, but it’s sometimes necessary. In any case, research many budget systems and choose the best option.
For example, you may want to try the 50/30/20 budget. With this system, you spend 50% of your net income on necessities – like rent, car insurance, food, etc. – and 30% on wants. The remaining 20% goes into savings.
2. Consider Your Options
Always consider your options before you commit to a mortgage. There are several different types available, such as:
- Fixed-rate mortgage: These loans have timeframes spanning from 5 years to 50, and the interest rate does not change throughout.
- FHA loan: Loans insured by the government via mortgage insurance, ideal for first-time homeowners.
- USDA loan:Offered through the U.S. Department of Agriculture for those who want to buy rural property, often with no down payment.
- Adjustable-rate mortgage: With this loan, the interest rate can fluctuate monthly, semi-annually or annually, with the rate going up or down.
If you already have a payment plan, you can think about refinancing – switching to a more suitable loan for your budget.
3. Don’t Forget Repairs
It’s no secret that houses need a little upkeep here and there. As a homeowner, you’re responsible for every issue, so it’s essential to stay on the ball. Often, you can anticipate a repair. For example, you should replace your roof about every 10 to 15 years or so. If you’re about to close on a fixer-upper, you may want to think twice, especially if you don’t have another place to stay.
A mortgage, plus repairs, utilities and more, can add up quickly when your income isn’t steady. Of course, some renovations can wait, so consider your situation personally.
4. Estimate What You Can Afford
In March, the Federal Reserve cut interest rates to stimulate the economy. That said, experts say it’s not enough to know if you can afford a mortgage. You may have the money for a loan and down payment, but what about insurance and other costs? Before you take on a mortgage, figure out if it’s possible to swing those expenses eight months from now – are you able to make them on time?
If you can’t, it’s probably best to hold off at the moment. After you secure another job, for example, reconsider that equation with your new income. Try to save around $500 every month on top of your rent to simulate potential payments.
Use These Tips to Plan Ahead
We face uncertain times, but that doesn’t mean you can’t plan for your future. Use these tricks to prepare for a mortgage correctly.
About Kacey Bradley
Kacey Bradley is the lifestyle and travel blogger for The Drifter Collective, an eclectic lifestyle blog that expresses various forms of style through the influence of culture and the world around us. Kacey graduated with a degree in Communications while working for a lifestyle magazine. She has been able to fully embrace herself with the knowledge of nature, the power of exploring other locations and cultures, all while portraying her love for the world around her through her visually pleasing, culturally embracing and inspiring posts. Along with writing for her blog, she frequently writes for sites like US Travel News, Thought Catalog, Style Me Pretty, Tripping.com and more!