It's a dream to be able to pay off your mortgage early, but is there a downside?  While it sounds like a great idea, there are some factors to consider before doing so.  This article will explore some of the reasons you may want to hold off on that final payoff amount.


Other Debts 


If you have various other debts (credit cards, auto loans, etc.) it's a good idea to pay those off before the mortgage.  Why?  Well, credit cards usually have astronomical interest rates so that outstanding balance will only grow if you choose to put all your money towards your mortgage.


That extra interest on your credit card or auto loan isn't tax deductible, which leads to the next point.


Check for Penalties 


Some mortgages come with a prepayment penalty.  If you're thinking about paying yours off early, then check the fine print to see if it applies, and also run the numbers to see if early payoff makes sense.


Fund Your Retirement Plan 


Before you go paying the mortgage off, consider funding your retirement plan.  If you don't have one already, it may be a good idea to set one up as they are tax advantageous.


Once you get a good handle on your retirement plan, paying off the mortgage might be next on your list.  A good-sized nest egg and a home that's mortgage-free sounds like a great way to start off retirement.


Consider the Side Effects 


When deciding to pay off the mortgage, there seems like no downside but there are various things to consider.  Will making additional payments put a strain on your savings?  How about your emergency fund? 


It's essential to consider your overall financial health when making such a big decision.  Although being mortgage-free would be a fabulous feeling, you don't want to do it at the detriment of your cash flow.


Pull the Trigger 


After reviewing all your financial information and deciding what's best for your situation, be confident in your decision and follow through.  It's a great feeling to be mortgage-free or on your way there.  The bottom line is that you need to do what makes you comfortable for your family.


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Buying a home is always a big decision, but when you're a first-time buyer it's even more important to get it right.


Without home-buying experience to draw on, it's easy to make mistakes you could regret for years to come. Here's what to avoid

1) Don't Rush the Mortgage


In the excitement of buying your first home, it can be tempting to sign up for the first mortgage offer you're approved for. Being too hasty is a serious mistake which can cause difficulties for a long time to come.


It's a good idea to speak to an impartial mortgage adviser before committing yourself to any deal, but in any case, always bear some simple points in mind.


- Be very cautious about how much you try to borrow, making sure you leave plenty of headroom in your budget. Owning your own home has many extra costs compared to renting, and you need to leave yourself some breathing space to handle them.


- Explore your down payment options. The larger the down payment you can afford, the lower your monthly payments will be. Could it be worth waiting a couple of years to save up a bigger deposit? However, don't break the bank to increase your down payment, as you'll need to keep some cash in reserve as an emergency fund.

 

2) Get a Pre-Approval


But whichever mortgage you wind up getting, set the process in motion with a pre-approval before actually searching for a home. Doing this has several advantages,


- It lets you know exactly which price range you can search in, so you don't waste time viewing homes which are over your budget.


- It puts you in a stronger position to drive a bargain, as the buyer knows you can access the funds to complete the purchase.


- Seeking a pre-approval will give you an early warning about any credit rating problems or other delays which could slow things down. You don't want to see your dream home slip through your grasp because of unnecessary delays.

 

3) Hire a Buyer's Agent


Most sellers will have a real estate agent to handle their side of the transaction, but it's less common for a buyer to hire their own agent. However, there are several good reasons why you should consider doing so.


- Having an expert fighting in your corner means you're much more likely to pay a realistic price.


- You'll have a better chance of spotting problems with a home before you're committed to a purchase.


- A buyer's agent also speeds up the purchase by smoothing out glitches and making sure you're fully prepared at every stage.


- A good agent's experience and contact list mean you can find the right property more quickly.

 

4) Arrange a Full Home Inspection


Before proceeding with a purchase, hire the services of a reputable home inspector. A good inspector will make sure no nasty surprises are waiting for you with the property's heating system, plumbing, roof, or general structure.

 

5) Be Careful During Closing


Lastly, once the buying process is underway, avoid making any changes to your financial situation. Don't switch jobs, take out new credit, or spend large amounts of money.


Anything which changes your credit status, even just by a small amount, could introduce delays or even kill off the sale altogether. Be patient until you finally have the keys to your new home in your hand.


There are plenty of pitfalls lying in wait for the first time buyer. However, if you take your time and learn from others' mistakes, you'll soon be happily moving into your new home.

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