If you’re a first-time homebuyer, then your head may be swimming due to the complexities of the mortgage process. While it’s easy to understand your unfamiliarity having never had to go through ay of this before, it is at the same time vital that you educate yourself to the details of buying and owning a home before you make such a huge financial commitment. After all, “swimming” is something that should be avoided when it comes to mortgages, due to the potentially frightening associations that it has to homeownership.
What Does it Mean to Be “Underwater”?
You’ve likely heard of people being “underwater” with their homes, yet may not fully understand what that actually means. If a homeowner is underwater, it means that he or she owes more on the home that what it is actually worth. If you end up in this scenario, you could end up having to deal with a number of problems. For example, if you’d like to refinance, your options could be extremely limited. That’s because few lenders may be willing to offer you great rates given the current market value of your home. Plus, if you need to move due to a work relocation or a loss of income, you could end up still owing money on your home even after its sale.
How You Can Avoid It
Yet going underwater with your mortgage isn’t unavoidable. Listed below are few things you can do to ensure this doesn’t happen to you:
- Save up for a large down payment: The less you owe on your home the better. Even if it means renting for longer than you’d like, the added equity will be worth it.
- Don’t overpay for your home: Don’t get caught in a bidding war that forces you to pay more, no matter how much you may love the property.
- Make extra payments when possible: By paying even as little as one extra mortgage payment per year, you build up more equity while also saving on interest.
While learning as much as you can about homeownership is important, no one expects you to become a mortgage expert overnight. Fortunately, you don’t have to be. With the assistance of a well-qualified mortgage broker like the Altius Mortgage Group that offers easy access to both services and advice, you’ll have the resources needed to ensure that you’re well-informed before making any major decisions.