Choosing the right kind of mortgage is a lot like choosing a spouse. (That might sound like crazy talk, but hang in there with me for a minute.)
Like the millions of single men and women milling around out in the world, there are dozens of mortgage options from which you can choose. So, how do you know which mortgage is the right one for you?
Not like dating, picking a mortgage should not be by trial and error. When you date, you can go out with different people and quickly learn what you are looking for and not looking for in a spouse.
Uncovering which mortgage is the one you want to marry with the purchase of your home (or even a refinance of your home) should be a well-thought-out process that leads you to the best option for your personal financial situation.
1. Set Your Goals
“When you fail to plan, you plan to fail.” True story. Buying a home is a HUGE financial investment.
In fact, it is likely one of the biggest ones you’ll make in your lifetime. So, you have to set goals for it. One of the first goals you want to set is your intention with the home.
- Do you plan to live in the home for the rest of your life?
- Are you planning to raise your kids here and then sell and move into a smaller home?
- Is this a starter home for the next five years and then you’ll upgrade to a larger, more spacious home?
Once you move out (if you move out) will you sell or keep the home and rent it out?
You might be wondering what all of this has to do with choosing the right mortgage. The answer is it has everything to do with the type of mortgage that you choose. The length of your stay in the home affects all of the decisions you make in choosing a mortgage, from the term to the type, and more.