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A Little Extra Mortgage

May 27, 2008  |  Difficulty: Easy

Path to mortage
When shopping for mortgage, think of not only the money you will need to purchase the house. What about needed renovations? Does your new house need some creative decorating? Do you have other debts that need to be rectified?

Maybe it might be best to take a little extra mortgage.

If you have saved up a good amount for a down payment, you can pay less money down and have a larger mortgage loan. This leaves you with some excess cash in hand, ready to spend anyway you like.

Is it a good idea to take a little extra mortgage? Many would think so. A mortgage loan could possibly be the most inexpensive loan that you will ever get. Mortgage interest rates can be between 5%-10%. The rate can be even lower if you get it from the right lender, and can be a true bargain if you have good credit. In the present day, if you have good credit and you are working with a reputable lender you can get a mortgage interest rate as low as 5%, maybe even lower. This is low compared to consumer loans that average about 10% interest, and credit card debt that can range from 15%-18%. So mortgage loans truly are the best deal on the market. Why not take advantage of them?

You don’t want to take too much mortgage that your down payment becomes too minute when compared to the overall cost of the property. Lenders typically want the mortgage and down payment to add up to the market value of the home.  This means that some lenders may be reluctant to give you a loan that will exceed the market value.

Beware! Some predatory lenders and real estate agents may try to talk you into taking more mortgage than you really need. Only you can decide whether an extra mortgage will be a benefit. If you take out a mortgage that is larger than you can financially handle, you will be placing yourself into a financial nightmare. Before taking extra, make sure that you are able to finance the weighty monthly payments.

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