When you apply for a mortgage, expect that your past and present will be heavily scrutinized. Lenders will check your credit score, employment history, and liquid assets to assess your capacity to repay the loan.
However, your future is just as important too. Without foresight, you can’t make sound decisions, and probably put yourself in a disadvantageous financial situation down the road.
Altius Mortgage Group and other experts list why you should think five to 15 years ahead before walking into the office of your mortgage lender in Utah, Texas, or Oklahoma:
It Can Tell You Whether to Take Out a Loan in the First Place
Your long-term plan can determine how viable home ownership actually is for your situation. If there’s a strong chance that you wouldn’t keep your mortgage for at least five years, you might be better off renting until you move.
First, the cost of renting pales in comparison to that of owning a property. Second, you might not recoup your expenses at resale due to home depreciation. Third, selling your property no higher than the balance you have left in your mortgage would only hurt your pocket. The lesson: Think twice before buying a house if you intend not to stay in it over the long haul.
It Can Guide You with Mortgage Choice
Interest varies from loan to loan, and your future could reveal which one is the most sensible to apply for. For instance, getting an adjustable-rate mortgage is a good strategy to enjoy lower interest initially when you expect your income to increase down the road. You would roll the dice if you take out an ARM, but your outlook on your life could help you take calculated risks.
It Can Help You Strategize Your Interest Reduction Plan
Choosing the best strategy to lower your mortgage rate depends on where you’ll be (literally and financially) years into the future. Maintenance of loan is an important factor to consider when buying down the interest rate, applying for an ARM, or paying a large down payment.
Whether you plan to finish it ASAP or not, having a mortgage is a long-term commitment. To avoid serious, life-long implications, ponder tomorrow as much as you think about today.