Model home on top of mortgage paperwork.

Make The Most Of Your Mortgage Loan

So you have been approved for a mortgage loan? You have a wonderful opportunity to secure the home of your dreams, but you need to be careful. Here are some ways that you can make the most of your home mortgage loan and your buying experience.

Buying a home is a big commitment and once you have made a purchase, it is not easy to change your mind. Make the wrong decision and you could be stuck living in a home that you do not like for years.

To make sure that you make the most out of your new mortgage loan, you need to put a lot of thought into what is going to be good for you now and in the future. Here are just a few of the questions that you need to ask yourself before you put your money on the table.

How Much Space Do You Need?

Obviously, you need to find a home that is big enough for you and your current family, but should you go bigger?

Absolutely, as long as there is any chance that your family will grow in the future. If you do not make a plan for your future growth, it could be possible that you will find your home on the market in a few years. That or you will have to pay for a costly home addition. Neither is a very good situation, so it may pay to secure a little extra space.

The need to consider future space is real, but you need to temper it with reality. If you think you might have a kid one day, an extra bedroom is nice, but don’t get carried away. You want extra space, but you also do not want to be a single homeowner living in a 6 bedroom house. All of that space comes at a cost with added maintenance, added utilities and an overall higher mortgage payment. It can add hundreds of dollars a month to your budget.

When possible, go a little bit bigger on home size but keep it reasonable to keep more cash in your pocket.

What Can You Afford To Spend?

This can mean don’t buy too big of a home, but it can also mean to be careful about the amenities. Hand scraped wood floors and marble are great, but they drive the price up. Do you truly need these things and/or can you really afford them?

Don’t make the maximum amount you are approved for become your target price range. The more you spend, the more your mortgage payment will be and you could find yourself being home broke. There is nothing worse than being in a great home, but not having enough money to do anything with it.

How Are The Schools?

One of the most important details to consider when choosing a home is the quality of schools in the area. You want to be in a home with good schools and it does not even matter if you have kids or even plan to have kids.

Good schools equal good resale value, so it is something that everyone must consider if you want to eventually make money on your home. Luckily, most real estate websites list the school rankings along with the other home details.

Consider these rankings closely though and take the time to analyze them. Remember that rankings change and your school ratings could be on the way up or on the way down. For example, a home with “A” rated elementary schools and “D” rated middle schools might be on the way up. A school with a “D” rated elementary school and “A” rated middle schools may be on the way down.

Take the ratings and use them as just one factor to judge the quality of a district. Other factors include forum discussions on the local schools in an area and the Facebook pages of the schools themselves.

Is Home Owners Insurance Expensive?

Not all areas in your state or even your city will have the same homeowners insurance rates. Before you make an offer on a home, it pays to get some quotes for insurance. Not doing so could mean that you will need several hundred dollars a month more to put towards escrow payments.

Factors that affect your homeowners rates include:

  • Age of the home.
  • Age of the roof.
  • Proximity to fire departments and hydrants.
  • Storm danger.
  • Flood and fire danger.

These are all factors that will be different with every home that you look at, which is why it pays to get quotes.

What Will The Utility Bills Be Like?

The bigger and older a home is, the higher the utility bills will be.

As homes have become more sophisticated, energy efficiency has also improved. That means that a home which is 20 years older, could have a significantly higher utility bill. Those higher utility charges could be better spent on a newer home that comes with a few more benefits.

Unless you just love the charm of an older home, a new home will:

  • Have a modern design.
  • Be more efficient.
  • Have greater comfort.
  • Be less expensive to insure.

Do I Need To Keep Looking?

Once you find a home and have an accepted offer, should you keep looking, just in case? No, stop looking. You will have become accustomed to searching the market on a daily basis, but just stop, because you might find something that is seemingly better and it will drive you crazy.

There will always be a better home, so the last thing that you want to do is keep looking and actually find one, after you are locked into a home deal. So, if you have an offer and earnest money is on the table, just do yourself a favor and stop looking.

Posted by
James Car

James Car is a finance, loan and budget expert based in the United States. After attending Brookhaven college, he went on to become a successful entrepreneur. He now enjoys writing articles that help people save and make the most of their money.