Maitland, Florida - 01/08/2021 — The promise of a new year might bring some people their first mortgage. For these people, it’s important to receive expert advice on the process. Homeowners and prospective homeowners can also benefit from these tips to improve their credit score and avoid increases in interest rates and penalties.
The experts at Mortgage Funding Direct have handled mortgages for many years and they take great pride in offering more specialized services than banks typically offer. Direct lenders devote more time to reach customers, provide personalized service, and shepherd applicants through the process with helpful information about closing a loan. The following tips for managing a mortgage can help anyone with a current mortgage or thinking about taking out a first or second mortgage:
Set a Strict Budget
There's a lot more involved with managing a mortgage than just making the scheduled payments. Homeowners inherit any problems with the home, and these are not always disclosed. If moving from a small home to a larger one, people often incur added expenses to furnish and maintain the property. Careful budgeting can recognize these expenses so that new homeowners don't find themselves overwhelmed.
Start an Emergency Savings Fund
Routine repairs and maintenance are a big part of homeownership. Starting an emergency fund to cover unexpected repairs and expenses makes sound advice. The smartest way to save is to set aside a certain percentage of income each pay period. Scheduling direct deposits from the bank into the account helps people manage to save, even if they're never saved a significant amount before.
Homeowners can use the emergency fund to cover repairs, home damages not covered by insurance, and failures of the plumbing, electrical, or heating systems. The fund can also be used to cover proactive maintenance. Mortgage Funding Direct recommends an emergency fund that lasts 6-12 months without a regular income.
Consider a Backup Plan
It's best to develop a backup plan in cases of lost income, illness, or even marital difficulties. It's easier to look for alternatives when they're not immediately needed. Planning well considers the alternatives practically without the added pressure that the emotion of a moment can add to the mix. After all, who would have considered vast layoffs caused by a virus?
Know When to Refinance
Drops in interest rate -- or earning a better credit rating -- can make it worthwhile to refinance a mortgage. Refinancing is usually worth pursuing if the new interest rate is 1% to 1.5% lower than the existing rate. Refinancing is also an option for consumers who need access to some of their home's equity.
Make Payments on Time
It’s very important to make mortgage payments on time. Be sure to contact the mortgage lender in advance if there are any looming financial problems. Maintaining communications with the lender is critical for protecting the homeowner's credit score and preventing defaults.
Understand the Terms of the CARES Act
The CARES Act was passed to help people struggling to pay their mortgages in the face of massive layoffs, shutdowns, and downsizing. Forbearance of missed mortgage payments isn't forgiveness of the debt. Eventually, the missed payments must be repaid -- either in a lump sum or spread out over the life of the mortgage. Interest still accrues, so those who can make their payments should do so.
These tips from Mortgage Funding Direct will help new and veteran homeowners alike manage their mortgages and stay on top of any situations that may arise during that time.
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